BIR Ruling [DA-229-00]

May 11, 2000 BIR RULING [DA-229-00] Sec. 105 VAT Ruling 073-99 Helen Keller International Rm. S-358-372, 3rd Floor, Secretariat Building PICC, CCP Complex, Roxas Boulevard Pasay City Attention: Rosanna C . Santos Accounting Officer Gentlemen : This refers to your letter received in this Office on March 1, 2000 requesting exemption from VAT being passed on to you on the following: 1. Office lease/rental; 2. Purchase of office equipment and supplies; 3. Local air travel; and 4. Venue/accommodation during orientation and training. It is represented that Helen Keller International, Inc. is a non-government/private voluntary association organized on New York, U.S.A. and is beneficiary of the USAID for projects here in the Philippines; that its main mission in the Philippines is to help prevent blindness among Filipinos especially at the LGU level; that as a foundation, you are registered as non-VAT taxpayer; and that you have no income generating activity (no output VAT) within which to offset the expenses (with input VAT) so much so that the foreign grant you are receiving from the USAID are indirectly taxed by way of the value-added tax passed on to you even if you are a tax-exempt foundation. In reply, please be informed that the 10% VAT 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). Since there is no showing that you are exempt from indirect tax under any existing law, your suppliers of goods, properties or services who are subject to the 10% VAT can pass on to you the said 10% VAT as part of the purchase price. (VAT Ruling No. 073-99) Accordingly, it is regretted that your request cannot be granted for lack of legal basis. EaHIDC Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner (Legal Service)