BIR Ruling [DA-228-01]

November 7, 2001 BIR RULING [DA-228-01] Alliance Francaise of Manila, Inc. 209 Nicanor Garcia Street Bel Air II, 1200 Makati Metro Manila Attention: Mr. Renaud Fessaguet Director Gentlemen : This refers to your letter dated March 6, 2001 requesting for exemption from the 10% value-added tax (VAT). It is represented that the Alliance Francaise de Manille is a Filipino non-stock, non-profit and VAT-exempt organization dedicated to the enhancement of cultural exchange between France and the Philippines; that you have been in the Philippines for 80 years now and in celebration of your 80th anniversary you have decided to take an additional step in providing better services to the students and patrons b constructing the Alliance Francaise Cultural Center; that in the course of constructing the building, you were advised by the building contractor, the SAEI-EEI, a French-Filipino joint venture, that an additional P2.7 Million in value-added tax will have to be passed on to you; and that since Alliance Francaise de Manille is a non-stock, non-profit corporation and that the entire land and building project is being funded by donations, you believe that the 10% VAT should not be passed on to you; hence, you request for exemption from the aforesaid tax. In reply, please be informed that the VAT is a tax on " 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 . . . 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. 105, Tax Code of 1997). Accordingly, the 10% VAT being charged or passed on by SAEI-EEI to Alliance Francaise de Manille is consistent with the aforecited provisions of law. This Office regrets that you request for exemption from the 10% VAT cannot be granted for lack of legal basis. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group