Department of Labor and Employment Regional Office No. III

March 19, 2008 BIR RULING [DA-177-08] Sections 105 & 106 (B) (1) Department of Labor and Employment Regional Office No. III 3rd & 4th Floors, ASCORP Bldg., McArthur Highway Dolores, San Fernando Pampanga Attention: Mr. Nathaniel V. Lacambra Regional Director Gentlemen : This refers to your letter dated February 18, 2008 requesting for exemption from payment of the value-added tax (VAT) on the transfer by way of donation of a motor vehicle by the International Labour Organization's Subregional Office-Manila to the Department of Labor and Employment, Regional Office No. III. As represented, the International Labor Organization's Subregional Office-Manila, a tax exempt entity is donating to the Department of Labor and Employment, Regional Office No. III, one (1) unit motor vehicle which it acquired from Ford Balintawak and more particularly described as follows: Model : Ford Ranger 4x4 pick-up Chassis No. : PE2UT4F1Y1BA00280 Motor/Engine No. : WLAT 197939 In reply, please be informed that Section 105 in relation to Section 106 (B) (1) both of the Tax Code of 1997, as amended by Republic Act No. 9337 provides, viz.: "SEC. 105. Persons Liable. Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Section 106 to 108 of this Code. The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. . . . SEC. 106. Value-Added Tax on Sale of Goods or Properties . SEHTIc (A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value-added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor . . . xxx xxx xxx (B) Transactions Deemed Sale. The following transactions shall be deemed sale: (1) Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business; xxx xxx xxx" The sale not in the course of business of all the properties which are originally intended for use in the course of business, is transaction "deemed sale" which is subject to VAT under Section 106 (A) of the same Code. Such being the case, the transfer by ILO of one (1) Ford Ranger 4x4 pick-up by way of donation to DOLE is subject to the 12% (then 10%) VAT under Section 106. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. CSaITD Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service