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Computation for VAT as it apply for ABC's of Infra

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Computation for VAT as it apply for ABC's of Infra

Post by engrjhez® on Mon Apr 13, 2009 11:40 am

Two years ago, we have this way of computing ABC:

  • DC = DIRECT COST
    OCM = Overhead, Contingencies, etc. (x% of DC)
    CGP = Contractor's Gross Profit (y% of DC)
    VAT = Value Added Tax (10% of DC)
    ESAO = Engineering Supervision, etc. ((DC+OCM+CGP+VAT)*3.5%)

    ABC = DC+OCM+CGP+VAT+ESAO

When I returned Engineering Office and started doing the estimates for proposed infra projects, the computation went like this:

  • DC = DIRECT COST
    OCM = Overhead, Contingencies, etc. (x% of DC)
    CGP = Contractor's Gross Profit (y% of DC)
    VAT = Value Added Tax ((DC+OCM+CGP)*7%)

    ABC = DC+OCM+CGP+VAT

Can someone from the DBM/LGU/COA clarify the correct measure of this computation AS IT APPLY TO LGU's?
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Re: Computation for VAT as it apply for ABC's of Infra

Post by venom.0420 on Tue Apr 14, 2009 3:34 pm

Here's how I'll compute the ABC:

Material Cost .......................... xxx,xxx.xx
Labor Cost ............................. xxx,xxx.xx
Direct Cost ............................. xxx,xxx.xx
Overhead Cost ........................ xxx,xxx.xx
Total Project Cost ................... xxx,xxx.xx
Contractor's Profit ................... xxx,xxx.xx
ABC before VAT ...................... xxx,xxx.xx
VAT ...................................... xxx,xxx.xx
ABC ...................................... xxx,xxx.xx

Notes:
1. The overhead costs include all other costs other than direct cost that are needed to complete the project.
2. Contractor's profit is usually a percentage of the Total Project Cost or the Total Direct Cost.
3. VAT is computed by multiplying the VAT rate of 12% to the ABC before VAT.

Hope this helps. Very Happy
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Re: Computation for VAT as it apply for ABC's of Infra

Post by engrjhez® on Tue Apr 14, 2009 4:26 pm

Thanks venom,

I am really confused of the 7% thing in the computation, and where the h••• did they derived it from. In a businessman's perspective, I will have to agree in the sense how you presented the computations for infra. We will have therefore to instruct engineers to adjust the computation of Program of Works (POW) for the proposed 2010 infra projects.

This will mean more revenue to the government on the price of less scope. Very Happy
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Re: Computation for VAT as it apply for ABC's of Infra

Post by riddler on Tue Apr 14, 2009 4:50 pm

engrjhez wrote:
Thanks venom,

I am really confused of the 7% thing in the computation, and where the h••• did they derived it from. In a businessman's perspective, I will have to agree in the sense how you presented the computations for infra. We will have therefore to instruct engineers to adjust the computation of Program of Works (POW) for the proposed 2010 infra projects.

This will mean more revenue to the government on the price of less scope. Very Happy


I believed that the 7% thing you mean is a portion of the WITHOLDING TAX (12% VAT). oUR ACCOUNTANT withholds the 7% from the claims for billing of the Contractor while the remaining 5% shall be directly paid by the contractor to the BIR upon filing of Income Tax. I dont really know the Logic behind engrjhez. May I ask the BIR out there?

ps. I already e-mailed the DO 57 S. 2002 to your address.
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Re: Computation for VAT as it apply for ABC's of Infra

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