SALES AND USE TAX AND THE NEW VALUE ADDED TAX · 2015-07-09 · Sales and Use Tax PHASE I - Until...
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RECENT CHANGES TO THE INCOME TAX SYSTEM SALES AND USE TAX AND THE NEW VALUE ADDED TAX ACT 72-2015
Transcript of SALES AND USE TAX AND THE NEW VALUE ADDED TAX · 2015-07-09 · Sales and Use Tax PHASE I - Until...
RECENT CHANGES TO THE
INCOME TAX SYSTEM
SALES AND USE TAX AND THE
NEW VALUE ADDED TAX
ACT 72-2015
2
RELEVO Y ADVERTENCIAS LEGALES
Esta presentación es para propósitos educativos
exclusivamente y no tiene como propósito, y no debe
considerarse, como una consulta contributiva, legal o de
contabilidad.
Cualquier consejo que esta presentación contenga no ha sido
considerado o escrito para ser usado, y no puede usarse, con
el propósito de evadir penalidades que puedan imponerse al
amparo del Código de Rentas Internas o de cualquier
disposición contributiva local, estatal o federal.
© FPV & Galindez 2015 (July 8, 2015)
Presenters
Kenneth Rivera, CPA, Esq.Tax PartnerFPV & GalíndezEmail. [email protected]
Axel Ramírez, CPATax PartnerFPV & GalíndezEmail. [email protected]
Reviewed by Leví Villegas, CPA
Tel. (787) 725-4545
Income taxes
Income tax system changes
Individual income tax rates remain unchanged
2% special tax on self employed individuals is repealed
Charitable contribution deductions for individuals are limited to exempt non-profit organizations qualified by Puerto Rico Department of the Treasury
New limitations are imposed on the deduction of payments to foreign related entities
New limitations are imposed on the Net Operating Loss Deductions
New limitations are imposed on the Capital Loss Deductions
Tax Credit Moratorium is extended until taxable years commencing during calendar years 2017
New Taxpayers “Large Taxpayers” for taxable years beginning after December 31, 2014 they will be required to file the income tax return under certain new rules
Value Added Taxes
Summary of Changes
Period Description Tax Rate Comments
Phase I – Until June 30, 2015 Goods 7% Credits may be taken for inputs
acquired (limited to 75%)
B2C Services 7% No credit is available for input
services
B2B Taxable Services 7% Designated under Act 40-2013
B2B Exempt Services No payment is
required
B2C Designated Services No payment is
required
Phase II – From July 1, 2015 Goods 11.5% 75% limitation is eliminated
Services 11.5% Services rendered outside of PR
are included
B2B Taxable Services 11.5%
B2B Exempt Services No payment is
required
B2C Designated Services No payment is
required
Phase III – From October 1, 2015 B2B Taxable Services 11.5%
B2B Exempt Services 4% No municipal payment is
required
B2C Designated Services 4% No municipal payment is
required
Phase IV – From April 1, 2016 Goods and Services 11.5% &
10.5%
Credits may be taken for inputs.
Designated & Exempt (no
municipal)
Sales and Use Tax
PHASE I - Until June 30, 2015
Tax Rate 7% (6.0% + 1.0%)
75% tax return credit for taxes paid
Only can be claimed in taxes over goods
GENERAL RULE: B2B Services are exempt
Exceptions: B2B Taxable services
GENERAL RULE: B2C Services are taxable
Exceptions: Designated professional services
Designated professional services are exempt
Commercial rent is exempt
Non Puerto Rico services might be taxable
Sales and Use Tax
B2B TAXABLE SERVICES
Bank charges
Collection services
Security services
Cleaning services
Laundry services
Repairs & maintenance services
Telecommunications services
Waste collection services
Motor vehicles operating leases
Sales and Use Tax
DESIGNATED SERVICES
Lawyers
CPAs
Tax Preparers
Architects
Geologists
Engineers & Surveyors
Real Estate Brokers
Appraisers
Professional Drafters
Sales and Use Tax
GOODS
Same rules remain
Credit may be taken in the tax return
Sales and Use Tax
PHASE II- From July 1, 2015 to September 30, 2015
Tax Rate 11.5% (10.5% + 1.0%)
Goods
Taxable Services (B2B Taxable services and B2C General Rule)
100% tax return credit for taxes paid
Only can be claimed in taxes over goods
B2B other remains exempt (same exceptions)
Professional designated services remain exempt
Commercial rent remains exempt
Professional services provided by a non-resident person are now taxable
Sales and Use Tax
PHASE III - From October 1, 2015 to March 31, 2016
Tax Rate 11.5%
100% tax return credit for taxes paid
Only can be claimed in taxes over goods
B2B previously exempt are now taxable at 4%
Designated professional services previously exempt are taxable at 4%
Commercial rent remains exempt
Services provided by a non-resident persons are taxable
Sales and Use Tax
PHASE III - From October 1, 2015 to March 31, 2016
Services rendered to other merchants (taxable at 4%)
Designated professional services (taxable at 4%)
Services by the Government of PR
Educational services
Interest and other fees for money use and related transactions
Services and insurance commissions
Health and medical services
Services rendered by persons with
an annual volume of business less
than $50,000
Services rendered by a person
conducting business in PR from a
related party that conducts its
business in PR
Taxable services EXCLUDES the following:
Value Added Tax
PHASE IV - Commencing on April 1, 2016
Tax Rate 11.5%
100% Tax credit for taxes paid
Except exempt sales
B2B pay at 10.5%
Designated professional services pay at 10.5%
Commercial rent remains exempt
Services rendered by a non-resident person are taxable
Effective Date
Authorization to Postpone 60 days
CATIC
Value Added Tax
Zero tax rate taxable transactions
Sale of goods for export
Services rendered for export
Sale of raw material and manufacturing equipment, if the
manufacture plant has a Certificate of Exemption
Value Added Tax
Service is defined as all services, including:
Designated professional services
Storage of goods
Leases and motor vehicle operating leases
Computer programming services
Installation of goods by the seller and a third party
Repair of goods
Value Added Tax
Services EXCLUDES
Services rendered between related parties if both conduct
their business operations in PR
Services rendered by the Government of PR
Services rendered as an employee
Services of maritime or air transport of goods
Any other article excluded from the term “goods”
Transition Rules
Sale of Goods
Sale of Services
Construction Projects
Sale of goods or service – prior to July 1
DA- 15-10
Sale of services
Rendered on or before June 30, 2015
Billed on or before July 20, 2015
Applicable rate 7%
B2B and Designated Services are still exempt
B2B and Designated Services Rendered on or before September 30, 2015
Billed on or before October 20, 2015
Applicable rate 0%
Sale of goods
Sold on or before June 30, 2015
Accrual method
Applicable rate 7%
Sale of Goods
Existing Contract as of June 30, 2015
Amount
Price
Must be Qualified with Treasury
CCPC 15-09
Filed by August 10, 2015 (SC 2921)
Prepay Tax
July 20, 2015
Valid until June 30, 2016
Special Rule for Imports
Pay 10.5% at introduction and request credit
Sale of Services
Existing Contract as of June 30, 2015
Amount
Price
Must be Qualified with Treasury
CCPC 15-09 & 15-11
Filed by August 10, 2015 (SC 2921)
B2B & Designated Services
Filed by September 30, 2015
Prepay the Amount of Services
June 30, 2015
Valid until June 30, 2016
Special Rule for Imports
Pay 10.5% at introduction and request credit
Construction Projects
Existing Project May 30, 2015
Qualify Project (“Proyecto de Edificación Cualificado”)
Owner
August 10, 2015
List Primary Contractors
Can be Amended
Qualify Primary Contractors (“Contrato Calificado de Proyecto de Edificación”)
Owner & Primary Contractors
August 10, 2015 (Form SC 2921)
List Secondary Contractors
Can be Amended
Subcontractors Can Also be Qualified
PrimarioSecundario 1
Secundario 2
1
Proyecto
Edificación
Calificado
2
Contrato
Calificado
3
Contrato
Calificado
(Opcional)
PRACTICAL
EXAMPLES
27
VAT Imposition
Introduction of Taxable Articles Taxable Transactions
Taxable Articles
Articles
(All goods, without considering their form,
essence or name)
Goods
(Excludes: cash, intangibles, blood, utilities, any
Government property)
Less: Exempt Articles
Sales Price
Total amount of the consideration paid in cash,
credit, property or service in a sale or transfer
of goods and services.
Goods Services Combined
Transactions
Less: Exempt Sales, Leases and Services
Value Added Tax Exemptions
Goods introduced into PR by government agencies in the US and PR
Prescription drugs
Items and equipment for physical or physiological deficiencies of disabled persons
Food and food ingredients
Printed books
Gas and finished petroleum products
Vehicles, boats and heavy equipment
Articles introduced for agriculture by bona fide farmers duly certified by the Department of Agriculture
Goods introduced by a tourism business with tax exemption decrees
Machinery, medical-surgical supplies, equipment and technology introduced by a hospital unit
Goods or services paid or that qualify for full or partial reimbursement by Medicare, Medicaid and health insurance in Puerto Rico
Manufacturing articles introduced in Puerto Rico
Articles for the treatment of medical conditions
Exempt Articles
Value Added Tax Exemptions
Goods and services to government agencies in the US and PR
Prescription medicines and treatment of health conditions
Items and equipment for physical or physiological deficiencies of disabled persons.
Food and food ingredients
Assets acquired with funds received under the SNAP (“PAN”) or WIC.
Printed books
Gas and finished petroleum products
Vehicles, boats and heavy equipment
Real Property
Articles sold for agriculture to bona fide farmers duly certified by the Department of Agriculture
Goods sold to merchants in the tourism business with tax exemption decrees
Donated goods by a non-profit entity which has obtained an exemption from the Secretary under Section 1101.01 of the PR IRCode
Occasional sale of property by churches or religious organizations
Machinery, medical-surgical supplies, property, equipment and technology to a hospital unit
Goods or services paid or that qualify for full or partial reimbursement by Medicare, Medicaid and health insurance in Puerto Rico
Exempt Sales
Value Added Tax Exemptions
Property subject to the room occupancy tax set by
the Tourism Company
Real property that is the principal residence of the
tenant
Real property for commercial purposes
Exempt Leases
Value Added Tax Exemptions
Financial, except those resulting in the imposition of bank
charges
Educational and child care
Health and hospital physician, whether in humans or animals
Legal: under a contingency fee agreement on certain legal
claims
Exempt Services
Services UNTIL JUNE, 2015
(SUT)
FROM JULY TO SEPTEMBER, 2015
(SUT)
FROM OCTOBER, 2015 TO MARCH, 2016
(SUT)
FROM APRIL, 2016
(VAT)
Business to Business (B2B) **
GENERAL RULE (Less Excluded Services) 0 0 4%*** 10.5%*TAXABLE:
REPAIRS & MAINTENANCE
LAUNDRY
CLEANING
WASTE COLLECTION
SECURITY
BANK CHARGES
COLLECTION OF ACCOUNTS
TELECOMMUNICATIONS SERVICES
DAILY RENTAL OF MOTOR VEHICLES
7% 11.5% 11.5% 11.5%
Business to Consumer (B2C)
GENERAL RULE (Less Excluded Services) 7% 11.5% 11.5% 11.5%DESIGNATED SERVICES:
LAWYERS
CPAs
TAX PREPARERS
ARCHITECTS
GEOLOGISTS
ENGINEERS & SURVEYORS
REAL ESTATE BROKERS
APPRAISERS
PROFESSIONAL DRAFTERS
0 0 4% 10.5%*
EXCLUDED SERVICES:
SERVICES PROVIDED BY THE GOVERNMENT
EDUCATION SERVICES
INTEREST AND OTHER CHARGES FOR THE USE OF THE MONEY
INSURANCE AND COMMISSION SERVICES
HEALTH OR MEDICAL SERVICES
SERVICES PROVIDED BY PERSONS WITH VOLUME OF BUSINESS
OF LESS THAN $50,000
SERVICES AMONG ENTITIES UNDER THE SAME CONTROLLED
GROUP
COMMERCIAL REAL PROPERTY RENT 0 0 0 0
References of previous table
*Certain issues might apply regarding the 1% municipal imposition in
certain cases.
** Might apply after July 15, 2015 to service rendered outside of
Puerto Rico. Transactions related to the sale of goods will remain
following existing rules, other than the increase in rates effective July
1, 2015.
*** B2B charges among related entities when both are doing business
in PR are not going to be subject to the 4% tax.
EXERCISE I
Example 1
Shoes, Inc. had the following transactions:
Purchases:
$50,000 in shoes
Sales:
$100,000 in shoes
Administrative Expenses:
Pays $10,000 to a Marketing Company (B2B)
Pays $20,000 for accounting services (“designated professional services”)
Pays $5,000 for commercial rent
Pays $1,000 for maintenance services
Shoes, Inc.
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Inputs:$50,000 x 6% = $ 3,000
1,000 x 6%= 60 3,060
Total $6,000 X 75%= $4,500 limit
Sales:$100,000 x 6% = $ 6,000
Total $6,000Credit (3,000)Pay / (Reimburse) $ 3,000
Pays $50,000 Sells $100,000
SHOESSHOES
DRU
Until June 30, 2015
State SUT only
Pays $10,000
MARKETING SERVICES
Pays $20,000
ACCOUNTING SERVICES
MAINTENANCE SERVICES
Pays $5,000
COMMERCIAL RENT Pays $1,000
Shoes, Inc.
37
Inputs:$50,000 x 10.5% = $ 5,250
1,000 x 10.5%= 105
Total $5,355
Sales:$100,000 x 10.5% = $ 10,500
Total $10,500Credit (5,250)Pay / (Reimburse) $ 5,250
Pays $50,000 Sells $100,000
SHOESSHOES
DRU
July 1, 2015 – September 30, 2015
State SUT only
Pays $10,000
MARKETING SERVICES
Pays $20,000
ACCOUNTING SERVICES
MAINTENANCE SERVICES
Pays $5,000
COMMERCIAL RENT Pays $1,000
Shoes, Inc.
38
Inputs:$50,000 x 10.5% = $ 5,25010,000 x 4%= 400 20,000 x 4%= 8001,000 x 10.5%= 105
Total $6,555
Sales:$100,000 x 10.5% = $ 10,500
Total $10,500Credit (5,250)Pay / (Reimburse) $ 5,250
Pays $50,000 Sells $100,000
SHOESSHOES
DRU
October 1, 2015 – March 31, 2016
Pays $10,000
MARKETING SERVICES
Pays $20,000
ACCOUNTING SERVICES
MAINTENANCE SERVICES
Pays $5,000
COMMERCIAL RENT Pays $1,000
State SUT only
39
Inputs:$50,000 x 10.5% = $ 5,250
10,000 x 10.5%= 1,05020,000 x 10.5%= 2,100
1,000 x 10.5%= 105
Total $8,505
Sales:$100,000 x 10.5% = $ 10,500
Total $10,500Credit (8,505)Pay / (Reimburse) $ 1,995
Pays $50,000 Sells $100,000
SHOESSHOES
DRU
Pays $10,000
MARKETING SERVICES
Pays $20,000
ACCOUNTING SERVICES
MAINTENANCE SERVICES
Pays $5,000
COMMERCIAL RENT Pays $1,000
Shoes, Inc.
State VAT only
From April 1, 2016
EXERCISE II
Examples
Hospital, Inc. had the following transactions:
Purchases:
$100,000 Medial Services
$40,000 Medical Supplies
Sales:
$500,000 Hospital Services
Administrative Expenses:
Pays $10,000 for security services
Pays $30,000 for legal services (“designated professional services”)
41
Hospital, Inc.
42
Inputs:$10,000 x 6% = $ 600
Total $600
Sales:500,000 x Exempt = -0-
MEDICAL SERVICES
Pays $40,000 Sells $500,000
Pays $100,000
MEDICAL SUPPLIES
HOSPITAL SERVICESDRU
Until June 30, 2015
State SUT only
SECURITY
Pays $10,000
LEGAL SERVICES
Pays $30,000
Hospital, Inc.
43
Inputs:$10,000 x 10.5% = $ 1,050
Total $1,050
Sales:500,000 x Exempt = -0-
Pays $40,000 Sells $500,000
Pays $100,000
DRU
July 1, 2015 –September 30, 2015
State SUT only
SECURITY
Pays $10,000
LEGAL SERVICES
Pays $30,000
MEDICAL SERVICES
MEDICAL SUPPLIES
HOSPITAL SERVICES
Hospital, Inc.
44
Inputs:$10,000 x 10.5% = $1,05030,000 x 4.0%= 1,200
Total $2,250
Sales:500,000 x Exempt = -0-
Pays $40,000 Sells $500,000
Pays $100,000
DRU
October 1, 2015 - March 31, 2016
State SUT only
SECURITY
Pays $10,000
LEGAL SERVICES
Pays $30,000
MEDICAL SERVICES
MEDICAL SUPPLIES
HOSPITAL SERVICES
Hospital, Inc.
45
Inputs:$10,000 x 10.5% = $ 1,05030,000 x 10.5%= 3,180
Total $4,230
Sales:500,000 x Exempt = -0-
Pays $40,000 Sells $500,000
Pays $100,000
DRU
From April 1, 2016
State VAT only
SECURITY
Pays $10,000
LEGAL SERVICES
Pays $30,000
MEDICAL SERVICES
MEDICAL SUPPLIES
HOSPITAL SERVICES
EXERCISE III
Example III
Supermarkets, Inc. had the following transactions:
Purchases:
$50,000 unprepared food for sale
$20,000 prepared food for sale
Sales:
$100,000 unprepared food
$40,000 prepared food
Administrative Expenses:
Pays $10,000 for security services
Pays $30,000 for legal services (“designated professional services”)
47
Supermarkets, Inc.
48
Inputs:$20,000 x 6% = $ 1,20010,000 x 6% = 600
Total $1,800
2,400 x 75% = $1,800 limit
Sales:40,000 x 6% = 2,400
Total $2,400Credit (1,200)Pay / (Reimburse) $ 1,200
PREPARED FOOD
Pays $50,000
Sells $40,000
Sells $100,000
Pays $20,000
UNPREPARED FOOD
UNPREPARED FOOD
PREPARED FOOD
DRU
Until June 30, 2015
State SUT onlySECURITY
Pays $10,000
LEGAL SERVICES
Pays $30,000
Supermarkets, Inc.
49
Inputs:$20,000 x 10.5% =$2,100
10,000 x10.5%= 1,050
Total $3,150
Sales:$40,000 x 10.5% = $4,200
Total $4,200Credit (2,100)Pay / (Reimburse) $2,100
PREPARED FOOD
Pays $50,000
Sells $40,000
Sells $100,000
Pays $20,000
UNPREPARED FOOD
UNPREPARED FOOD
PREPARED FOOD
DRU
Pays $10,000
Pays $30,000
SECURITY
LEGAL SERVICES
July 1, 2015 –September 30, 2015
State SUT only
Supermarkets, Inc.
50
Inputs:$20,000 x 10.5%= $2,10010,000 x 10.5% = 1,05030,000 x 4% = 1,200
Total $4,350
Sales:$40,000 x 10.5% = $4,200
Total $4,200Credit (2,100)Pay / (Reimburse) $2,100
PREPARED FOOD
Pays $50,000
Sells $40,000
Sells $100,000
Pays $20,000
UNPREPARED FOOD
UNPREPARED FOOD
PREPARED FOOD
DRU
Pays $10,000
Pays $30,000
SECURITY
LEGAL SERVICES
October 1, 2015 - March 31, 2016
State SUT only
51
Inputs:$20,000 x 10.5% = $2,10010,000 x 10.5% = 1,050 30,000 x 10.5% = 3,150
$6,300
Total $6,300
Sales:$40,000 x 10.5% = 4,200
Total $4,200Credit (6,300)A pagar / (Reintegrar) ($2,100)
PREPARED FOOD
Pays $50,000
Sells $40,000
Sells $100,000
Pays $20,000
UNPREPARED FOODUNPREPARED FOOD
PREPARED FOOD
DRU
From April 1, 2016
Pays $10,000
Pays $30,000
SECURITY
LEGAL SERVICES
State VAT only
Supermarkets, Inc.
Others, Inc.
52
Inputs:$20,000 x 10.5% = $2,10010,000 x 10.5% = 1,050 30,000 x 10.5% = 3,150
6,300
$4,200 x 71%*= $2,982Total $3,318
Sales:$40,000 x 10.5% = 4,200
Total $4,200Credit (3,318)Pay / (Reimburse) $ 882
PREPARED FOOD
Pays $50,000
Sells $40,000
Sells $100,000
Pays $20,000
UNPREPARED FOODUNPREPARED FOOD
PREPARED FOOD
DRU
Pays $10,000
Pays $30,000
SECURITY
LEGAL SERVICES
* Sales proportion• Taxable Sales $ 40,000• Exempt Sales 100,000• Total Sales $ 140,000
$100,000/$140,000 = 71% State VAT only
From April 1, 2016
Example IV
First Operational Month:
Drugs R US (DRU) manufactures and sells drugs
First month transactions:
Buys $40,000 from a local supplier in OTC drugs for resale
Sells $150,000 in OTC drugs to private entities in PR
Administrative Expenses:
Pays $25,000 to a CPA for tax return preparation
Pays $20,000 for programming services to an entity outside of PR
Pays $10,000 in commercial rent
VAT- MONTH 1
Inputs:$40,000 x 10.5% = $ 4,200
20,000 x 10.5% = 2,10025,000 x 10.5% = 2,625
Total $ 8,925
Sales:$150,000 x 10.5% = $ 15,750
Total $15,750Credit ( 8,925)Pay / (Reimburse) $ 6,825
55
PROGRAMMINGOUTSIDE OF PR
Pays $40,000
Pays $10,000
Pays $25,000
Sells $150,000
Pays $20,000
LOCAL SUPPLIEROTC DRUGS
OFFICE
PRIVATE ENTITIES OTC DRUGS
ACCOUNTANT
DRU
State VAT only
Second Operational Month:
Transactions in the second month:
Buys:
$200,000 in OTC drugs for resale
$20,000 in prescription drugs for resale
Sells:
$150,000 for OTC drugs to private entities
$30,000 for prescription drugs to private entities
Administrative Expenses:
Pays $10,000 in commercial rent
Pays $15,000 in security services
VAT- MONTH 2
57
Inputs:$ 200,000 x 10.5% = $ 21,000
15,000 x 10.5% = 1,575$22.575
Limit $1,575 *83%= $1,307Total $22,307
Sales:$ 150,000 x 10.5% = $ 15,750
Total $15,750Credit (22,307)Pay / (Reimburse) ($ 6,557)
LOCAL SUPPLIERSOTC DRUGS
LOCAL SUPPLIERRX DRUGS
Pays $200,000
Pays $10,000
Sells $150,000
Sells $30,000Pays $20,000
OFFICE
OTC DRUGSPRIVATE ENTITIES
RX DRUGS PRIVATE ENTITIES
DRU
State VAT only
SECURITY
Pays $15,000
* Sales proportion• Taxable Sales $150,000• Exempt Sales 30,000• Total Sales $ 180,000
$150,000/$180,000 = 83%
Third Operational Month
Transactions in the third month:
Imports:
$100,000 in OTC drugs for resale
$30,000 in raw material for drugs manufacturing operations
Sells:
$40,000 in OTC drugs to Centro Médico
$350,000 in OTC drugs to private entities
Administrative expenses:
$10,000 for office rent
$20,000 for legal consulting services
$25,000 for engineering services
Inputs:$100,000 x 10.5% = $ 10,500
30,000 x 0% = 020,000 x 10.5% = 2,100 25,000 x 10.5% = 2,625
$15,225
Total $15,225 x 90%* = $13,702
Sales:$ 350,000 x 10.5% = $ 36,750
Total $36,750Credit (13,702)PY Credits (6,557)Pay / (Reimburse) $16,491
59
VAT- MONTH 3
LAWYERS
RAW MATERIAL IMPORT
OTC DRUGS IMPORT
* Sales proportion• Taxable sales $350,000• Exempt sales 40,000• Total Sales $ 390,000
$350,000/$390,000 = 90%
CENTRO MÉDICOOTC DRUGS
PRIVATE ENTITIES OTC DRUGS
Pays $10,000
Sells $350,000
Sells $40,000
Pays $30,000
Pays $20,000
Pays $25,000
Pays $100,000
OFFICEENGINEERS
DRU
State VAT only
Fourth Operational Month:
Transactions in the fourth month:
Buys $50,000 in OTC drugs to a local supplier for resale
Imports $200,000 in raw materials for drug
manufacturing
Exports $100,000 in manufactured drugs
Administrative Expenses:
Pays $30,000 in legal services
Pays $10,000 in commercial rent
61
Inputs:$200,000 x 0% = $ 0
50,000 x 10.5% = 5,25030,000 x 10.5% = 3,150
Total $ 8,400
Sales: $ 100,000 x 0% = $ 0
Total $ 0Credit (8,400)Pay / (Reimburse) ($8,400)
VAT- MONTH 4
OFFICE
LOCAL SUPPLIER OTC DRUGS
RAW MATERIAL IMPORT
MANUFACTURED DRUGS EXPORT
Pays $10,000
Sells $100,000
Pays $200,000
Pays $30,000
Pays $50,000
LAWYERS
DRU
State VAT only
Fifth Operational Month:
Transactions in the fifth month:
Imports:
$90,000 in OTC drugs for resale
$100,000 in raw material for drug manufacturing operations
Sells:
$100,000 in OTC drugs to Centro Médico
$300,000 in OTC drugs to private entities
Administrative Expenses:
$10,000 for commercial rent
$20,000 for legal consulting services
$15,000 for engineering services
62
Sales:$ 300,000 x 10.5% = $ 31,500
Total $31,500Credit (9,844)PY credits (8,400)Pay / (Reimburse) $13,256
63
Inputs:$100,000 x 0% = $ 0
90,000 x 10.5% = 9,45020,000 x 10.5% = 2,100 15,000 x 10.5% = 1,575
Total $13,125 x 75%* = $9,844
LAWYERS
* Sales proportion• Taxable Sales $300,000• Exempt Sales 100,000• Total Sales $ 400,000
$300,000/$400,000 = 75%
OFFICE
CENTRO MÉDICOOTC DRUGS
PRIVATE ENTITIES OTC DRUGS
RAW MATERIAL IMORTS
OTC DRUGS IMPORTS
Pays $10,000
Sells $300,000
Sells $100,000
Pays $100,000
Pays $20,000
Pays $15,000
Pays $90,000
DRU
ENGINEERS
VAT- MONTH 5
State VAT only
Sixth Operational Month:
Transactions in the sixth month:
Imports:
$50,000 in OTC drugs for resale
$80,000 in prescription drugs for resale
$30,000 in raw material for drug manufacturing operations
Sells:
$90,000 to foreign private entities in manufactured OTC drugs (exports)
$100,000 to Centro Médico in OTC drugs
$300,000 to Droguería XYZ in OTC drugs
$70,000 to Droguería ABC in prescription drugs
Administrative Expenses
Pays $10,000 in commercial rent
Pays $15,000 to an accountant for tax preparation services
64
Inputs:$50,000 x 10.5% = 5,250 x 75% $ 3,938
30,000 x 0% = 0 15,000 x 10.5%= 1,575 x 70%** = 1,103
Total $5,041
Sales:$ 90,000 x 0% = $ 0300,000 x 10.5% = 31,500
Total $31,500Credit (5,041)Pay / (Reimburse) ($26,459)
* $300,000/$400,000= 75%**$390,000/$560,000= 70%
**
**
Pays $30,000
Sells $90,000
Sells $100,000
Pays $50,000
Pays $10,000 Pays $15,000
Pays $80,000
OTC DRUGS IMPORTS
RX DRUGS IMPORTS
OFFICEACCOUNTANT
CENTRO MÉDICOOTC DRUGS
EXPORTS TO PRIVATE ENTITIES OTC
MANUFACTURED DRUGS
RAW MATERIAL IMPORTS
Sells $300,000
Sells $70,000
DROGUERÍA XYZOTC DRUGS
DROGUERÍA ABCRX DRUGS
*
*
**
DRU
VAT- MONTH 6
State VAT only
EXERCISE V
Services among affiliated entities
FEMME FASHION:
Administrative Expenses:
Pays $10,000 for maintenance services
Pays $20,000 for security services
Receives $30,000 for commercial rent from its affiliate
UNIQUE TRENDS:
Buys $40,000
Sells $150,000
Pays $30,000 in commercial rent to its affiliate
Administrative Expenses
Pays $25,000 for legal services
Pays $5,000 for accounting services
Femme Fashion
68
Inputs:$10,000 x 10.5%= 1,05020,000 x 10.5%= 2,100
Total $3,150
State VAT only
Pays $10,000
Pays $20,000 ACCOUNTING SERVICES
Pays $25,000
LEGAL SERVICES
Unique TrendsInputs:
$40,000 x 10.5% = $4,200 25,000 x 10.5%= 2,625 5,000 x 10.5%= 525
Total $7,350
Sales:$150,000 x 10.5% = $15,750
ConsolidationTotal $15,750Credit (10,500)Pay / (Reimburse) $ 5,250
SECURITY
Receives $30,000
Sells $150,000
MAINTENANCE SERVICES
DRESSES DRESSES
Pays $5,000
Buys $40,000
COMMERCIAL RENT UNIQUE TRENDS
COMMERCIAL RENT FEMME FASHION
Pays $30,000
Sales:$30,000 x exempt = $0
Questions / Comments
