BIR Ruling [DA-103-02]

May 30, 2002 BIR RULING [DA-103-02] The Regional Director Revenue Region No. 13 Cebu City S i r : This refers to the Particulars of Concern indicated in your Summary Report of Staff meeting Discussions for the month of April, 2000 the subject of which is: "Course of action to be taken for pawnshop operators who refused to register as VAT taxpayers". In connection therewith, there is quoted hereunder the pertinent portion of Revenue Memorandum Circular No. 45-2001 dated October 12, 2001, viz : "In view of the repeal of the old lending investor's tax, the issue pending in Court as to whether or not pawnshop operators may be legally levied with the lending investor's tax has become moot and academic. Pawnshop operators are therefore liable to the 10% VAT based on the gross receipts beginning January 1, 1996, regardless of the final decision of the Supreme Court on the issue. For purposes of the VAT, gross receipts of pawnshop operators include interest charges, profit from the sale of pawned properties, and all other items of income derived from their business activity. "On the basis of the foregoing, all pawnshop operators should have filed their corresponding monthly/quarterly VAT returns beginning taxable year 1996 up to the present. Those who are not liable to VAT pursuant to Section 109(z) of the Tax Code of 1997 (where the gross annual receipts do not exceed P550,000) should have filed the appropriate percentage tax returns within the same period. If any pawnshop fails to register as a VAT taxpayer or pay the VAT, you should take the appropriate action outlined in the Tax Code of 1997 and appropriate issuances to enforce the law. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner (Legal and Inspection Group)