BIR Ruling [DA-194-04]

April 6, 2004 BIR RULING [DA-194-04] RMC 74-99; VAT Ruling No. 028-2001 AVESCO Marketing Corporation Aurora Blvd. Cor. Yale St., Cubao Quezon City Attention: Ms. Delia A. De Borja Accounting Manager Gentlemen : This refers to your letter dated November 12, 2003 requesting for an opinion as to what type of invoices you are going to issue to your customers. HaDEIc It is represented that you are a VAT-registered taxpayer with TIN No. 000-400-152-000; that you are engaged in wholesale and retail of electrical, electronics and communications equipment/supplies; that at present, you are operating three (3) branches within Metro Manila; that you have customers who are classified as Non-VAT, Exempt, and Zero-Rated taxpayers like PEZA-registered companies; that you are experiencing problems as to the issuance of VAT-registered invoices to your customers; that your customers claim that inasmuch as they are these types of taxpayers, they should not be charged VAT; that your customers have documents showing exemption from the payment of these taxes; and that you would like to be clarified as to what to do regarding these types of transactions. In reply, please be informed that Section 4.108-1 of Revenue Regulations No. 7-95 provides: "Section 4.108-1. Invoicing Requirements. All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which must show: 1. the name, TIN and address of seller; 2. date of transaction; 3. quantity, unit cost and description of merchandise or nature of service; 4. the name, TIN, business style, if any, and address fo the VAT-registered purchaser, customer or client; 5. the word "zero rated" imprinted on the invoice covering the zero-rated sales; and 6. the invoice value of consideration. Only VAT-registered persons are required to print their TIN followed by the word: VAT" in their invoices or receipts and this shall be considered as a "VAT Invoice". All purchases covered by invoices other than "VAT Invoice" shall not give rise to any input tax. If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable and exempt transactions. A "VAT Invoice" shall be issued only for sales only for sales of goods, properties or services subject to VAT imposed in Sections 100 and 102 and (now Sections 16 and 108 of the of theTax Code" of 1997. The invoice or receipt shall be prepared at least in duplicate, the original be given to the buyter and the duplicate to be retained by the seller as part of his accounting records." Thus, a VAT-registered person, you are required to issue VAT invoices or receipts for your VAT taxable transactions. For your exempt transactions, you are required to issue separate non-VAT invoices or receipts for such exemption transactions and for your zero-rated sales, you are required to issue VAT invoices or receipts where the word "zero-rated" is imprinted on the invoice covering zero-rated sales. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group