BIR Ruling [DA-259-01]

December 06, 2001 BIR RULING [DA-259-01] Sec. 105 Philippine International Trading Corporation Philippine International Centre 46 Sen. Gil Puyat Avenue 1200 Makati City Attention: Ms . Carmelita Belen C . Domondon Manager, Accounting Department Gentlemen : This refers to your letter dated May 8, 2000 stating that "Our company, Philippine International Trading Corporation (PITC), is a government Owned and Controlled Corporation engaged in import and export of merchandise and commodities. In 1997, PITC assisted National Food Authority (NFA), a government agency, on the export shipment of 16,152.14 MT raw cane sugar to the United States. PITC's assistance was limited to integrated and documentary services only. For services rendered, PITC billed NFA the agreed service fee plus 10% output tax." Based on the foregoing, you are requesting clarification if the imposition of 10% VAT on the said transaction is proper. 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 import 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 imposition of the 10% VAT in your invoice billing to the NFA is consistent with the aforequoted provision of law. AEDCHc Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group