BIR Ruling [DA-200-01]

October 19, 2001 BIR RULING [DA-200-01] 108 (A) 136-91 Church of GOD in Christ Jesus Bagong Pag-asa Village Apalit, Pampanga Attention: Mr . Eliseo F . Soriano President Gentlemen : This refers to your letter dated August 30, 2001, requesting for exemption from the value-added tax (VAT) as a non-stock, non-profit religious corporation. You stated that in furtherance of the primary goals of your religious corporation to propagate the gospel of Christ, you have undertaken the project of using the most effective and widespread medium of communication to the faithful, that is, through television; that you have several television programs aired over SBN 21; that since the corporation leases television airtime, the television station imposes on your corporation VAT in the rentals you have to pay; and that payment of the rentals are sourced from your members' contributions and donations. You believe that the imposition of VAT on the rentals you pay to the television station for the propagation of faith would impair the free exercise and enjoyment of religious freedom and ownership which carried with it the right to disseminate religious information through all legitimate means of communication. In support of your request, the cited Supreme Court decision in the Case of American Bible Society vs. City of Manila, G.R. No. L-9637, April 30, 1957 wherein it was held that the fact that plaintiff sells religious articles at prices more than the actual cost of the same does not mean that it engaged in the business of selling such merchandise for profit for which a municipal license is required. Thus, since you are also involved in the primary goal of propagating one's faith, no license or tax must be applied, otherwise he freedom of religion will be curtailed. In reply, please be informed that we are not subjecting your corporation to the value-added for leasing television airtime as a means of propagating one's faith. However, when you purchase TV airtime to propagate to the faithful the Gospel of Christ, the station owns sells time spots within a specific time. This constitutes rendition of service to other for a consideration subject to the 10% value-added tax imposed under Section 108(A) of the Tax Code of 1997. (BIR Ruling No. 136-91 dated July 16, 1991) As lessor, the TC station owner is the one primarily liable to the payment of VAT but it can pass on to you the amount of tax as part of your rental to the former. You cannot claim exemption from the 10% VAT being passed on by the TV station owner because VAT, being an indirect tax may be shifted or passed on to the buyer of goods and services, pursuant to Section 105 of the same Code. cCTESa In view of the foregoing, we regret to deny your request for exemption from VAT for lack of legal basis. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARRA Deputy Commissioner Legal and Inspection Group