BIR Ruling [DA-255-06]

April 12, 2006 BIR RULING [DA-255-06] R.A. No. 9337 Protranscribe, Inc . 2/F, 8192 Dr. A. Santos Ave., cor. Palanyag Rd. Sucat (Evacom) Paraaque City Attention: Atty . Melchor M. Alonzo School Administrator Gentlemen : This refers to your letter dated June 8, 2005 requesting for a ruling that your school is exempt from the payment of value-added tax (VAT) on educational services. As represented, Protranscribe, Inc. is doing business under the name and style of MTC Academy-Paraaque City (MTC) . It is registered with the Securities and Exchange Commission (SEC) under Company Registration No. CS200417365 on October 29, 2004. Its primary purpose is "to provide technical or vocational instruction, training and services to interested persons or entities, in the fields of digital transcription, healthcare documentation, information technology, computer science, and all other allied courses, sciences and subjects. The Technical Education and Skills Development Authority (TESDA) has granted MTC the authority to offer programs for Medical Transcriptionist, Medical Transcription-Editor, and Medical Transcription-Team Leader under Certificates of TVET Program Registration WTR Nos. 0513032036, 0513033037, and 0513034038, all dated March 17, 2005. The main income of MTC comes from the tuition fees paid by the students. In reply, please be informed that Republic Act (R.A.) No. 9337 amended Section 109(m) of the Tax Code of 1997. Under R.A. No. 9337, Section 109(m) was renumbered Section 109(H) to read as follows: "SEC. 109. Exempt Transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. xxx xxx xxx (H) Educational services rendered by private educational institutions, duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA) and those rendered by government educational institutions. Thus, under R.A. No. 9337, TESDA recognized or accredited institutions are exempt from VAT pursuant to Section 109(H) thereof. In view of the foregoing, MTC Academy-Paraaque City, a TESDA recognized or accredited institution is exempt from VAT pursuant to Section 109(H) of the Tax Code of 1997, as amended by R.A. No. 9337. 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. HIAEaC Very truly yours, (SGD.) PABLO M. BASTES, JR. OIC-Head Revenue Executive Assistant Legal Service