Practice question
A taxable sale is stipulated subject to 12% VAT and the total VAT-inclusive price is PHP1,120. The seller says the buyer must pay another PHP134.40 merely because12% should be applied again to the inclusive total. What basic distinction is relevant?
- Every VAT-inclusive price automatically excludes VAT.
- The seller's legal tax liability disappears whenever the price is inclusive.
- The buyer automatically owes every extra amount named by the seller.
- The agreed inclusive price already contains the tax component; applying an additional charge is not established merely by calling VAT indirect.
- The indirect-tax label rewrites every contractual price.
Legal references
- NIRC Sections57-58,105-106 and110: https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- RA12023, current digital-services VAT and reverse-charge provisions: https://lawphil.net/statutes/repacts/ra2024/ra_12023_2024.html
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