BIR Ruling [DA-187-97]

April 21, 1997 BIR RULING [DA-187-97] Dynasty Restaurant & Leisure, Inc. 1015-1023 Maria Orosa Street Ermita, Manila Attention: Mr. Jackson Gan President Gentlemen : This refers to your letter dated July 15, 1996 requesting for a ruling as to whether your sales of goods to PAGCOR is exempt from VAT. In reply, please be informed that PAGCOR's tax exemption under its charter, P.D. No. 1869, pertinent portions of which provide as follows: "Section 13. Exemptions . (1.) Customs duties, taxes and other imposts on importation . All importations of equipment. All importations of equipment, vehicles, automobiles, boats, ships, barges, air craft and such other gambling paraphernalia, including accessories of related facilities, for the sole and exclusive use of the casinos, the proper and efficient management and administration thereof, and such other clubs, recreation or amusement places to be established under and by virtue of this Franchise shall be exempt from the payment of all kinds of customs duties, taxes and other imposts, including all kinds of fees, levies, or charges of any kind or nature, whether National or Local . (2.) Income and other taxes. (a) Franchise Holder; No tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local , shall be assessed and collected under this Franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation, except a Franchise Tax of five percent (5%) of the gross revenue or earnings derived by the Corporation from its operation under this Franchise . Such tax shall be due and payable quarterly to the National Government and shall be lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected of any municipal, provincial, or national government authority. (Emphasis supplied) DaESIC refers only to its direct tax liability. Since VAT is an indirect tax, the amount of tax may be passed on by Dynasty Restaurant & Leisure, Inc. to PAGCOR as part of the cost of goods under Section 99 of the Tax Code, as amended. (VAT Ruling No. 005 dated May 14, 1996) Very truly yours, (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Asst. (Legal Service)