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As soon as their gross sales or gross receipts exceeded P1,919,500, then, it shall become mandatory to update registration to that of 12% Value Added Tax (VAT) because every succeeding sale shall be subject to 12% VAT.
#Monthly gross receipts example code
Taxpayers registered under this are liable for 3% percentage tax under Section 116 of the National Internal Revenue Code (NIRC or Tax Code, as amended). Sometimes, OPT is termed as business tax for small business because of this rule.
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In short, Vatable activity, but non-VAT registered with gross sales or receipts of not more than P1,919,500 in the preceeding year. First group applies to those VATable activities, but whose gross sales does not exceed the VAT registration threshold, and initially registered with the BIR as OPT or non-VAT taxpayer. OPT is applicable to VATable activities below the VAT threshold You simply multiply 3% by the amount of p300,000 and you pay BIR the P9,000 using BIR Form 2551M. No deduction in OPT like that of VAT so computation of the tax is very much simple.Įxample: if you sold P300,000 of goods, then your OPT liability will be P9,000. Remember in VAT, you deduct input VAT from output VAT to arrive at the VAT due and payable. In computing the OPT, you simply multiply the rate to the taxable base and the resulting amount is the OPT due and payable to the BIR without deduction. Seller may add it on to the selling price but still, the BIR looks at the seller as the actual payor of the OPT. In OPT, direct tax means the seller is the one who shoulders the tax and not passed on to buyer. OPT is a direct tax based on gross sales or gross receipts Worst, BIR may consider it as fraudulent, if tax evasion is intended, so you might be prosecuted. Non-registration will only expose you to liability for penalties on non-registration, penalty for non-filing and payment of business taxes. Non-registration does not mean non-liability, if you are actually continuously engaged in business or profession. You will be taxed either OPT or VAT because you are engaged in trade or business or in the practice of profession.
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Please see below some of its overview.Īs a business tax, OPT is imposed upon those engaged in trade or business or practice of profession. Thus, we take a few lines to share views on its application. This simple definition, may a bit confusing in relation to the application of the Value Added Tax (VAT) rules. As the Bureau of Internal Revenue ( BIR) defines it, Other Percentage Tax (OPT or non-VAT as commonly termed) is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P1,919,500 (effective 2012), and are not value-added tax (VAT) registered.