Basis for VAT

If an ordinary asset were sold below the zonal value, we all know the creditable withholding tax will be based on the zonal value. But what about the Value Added Tax (VAT)?

These are some things the regulations are silent about and fall in the gray area.

Some argue that VAT should be based on the selling price since the law states, "VAT applies to practically all sales of services and imports, as well as to the sale, barter, exchange, or lease of goods or properties (tangible or intangible). The tax is equivalent to a uniform rate of 12%, based on the GROSS SELLING PRICE of goods or properties sold, or gross receipts from the sale of services." Moreover, the VAT payable in the VAT Return form is computed automatically based on the selling price.

But from what we could gather from the internet, everyone agrees that VAT would be applied to the zonal value if it is higher than the selling price.

Hopefully, the BIR sheds some light on this.

If anyone has actual experience, please share it in the comments or send me a PM. :-)