BIR Ruling [DA-210-04]

April 12, 2004 BIR RULING [DA-210-04] Sec. 105 VAT Ruling No. 305-88 Westminster High School, Inc. Honorio Lopez Blvd., Tondo, Manila Attention: Mr. Daniel Chiok Principal Gentlemen : This refers to your letter dated November 15, 2002 requesting for tax exemption on your purchase of motor vehicle from Nissan Motors Corporation. Documents submitted show that Westminster High School, Inc. is a non-stock, non-profit educational institution duly recognized by the Department of Education Culture and Sports in accordance with Government Recognition Nos. 9 and 10 series of 1973, and No. 73 series of 1955, authorized to operate complete elementary course (day), secondary course (day) and kindergarten course respectively. In reply, please be informed that under Section 105 of the 1997 Tax Code, the 10% VAT is imposed on " Any person who, in the course of trade or business, sells, barters, exchanges, leases good or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 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 ." Accordingly, although Westminster High School, Inc. is an educational institution operating not for profit, the purchase of the motor vehicle is not exempt from VAT. The seller of the vehicle is the one liable to the VAT on its sale of the motor vehicle to the school, however, it may pass on the VAT to its buyer, which in this case, the Westminster High School, Inc. because VAT is an indirect tax and the amount of tax may be shifted on to the buyer, transferee or lessee of the goods, properties or services. ( VAT Ruling No. 305-88 dated July 14, 1988 ) In view of the foregoing, we regret to inform you that your aforesaid request for exemption from payment of value-added tax (VAT) on your purchase of motor vehicle from Nissan Motors Corporation cannot be granted for lack of legal basis. cASIED Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group