BIR Ruling [DA-322-04]

June 11, 2004 BIR RULING [DA-322-04] Sections 106 & 109 (m) BIR Ruling No. DA-40-02 Holy Francis School, Inc. Servant of St. Francis Convent Multinational Ave., Multinational Vill. Paraaque City Attention: Frt. Cesar Ma. Talamayan, SSF Gentlemen : This refers to your letter dated September 30, 2003 requesting for a ruling exempting your school from the payment of value added tax. It is represented that your institution is a non-stock, non-profit educational institution; that its assets and revenues are actually used directly and exclusively for educational purposes; that no part of its income inures to the benefit of any private member or individual; and that you have a pending application for government permit to operate pre-elementary and elementary courses for school year 20032004 with the Department of Education. In reply, please be informed that educational services rendered by private educational institutions duly accredited by the Department of Education, Culture and Sports (DECS) and the Commission on Higher Education (CHED) are exempt from the 10% VAT pursuant to Section 109(m) of the 1997 Tax Code. However, this exemption does not extend to its other activities involving sale of goods and services which are subject to the 10% VAT imposed under Section 106 of the same Code. Such tax payment may legitimately be passed on to customers like non-stock, non-profit educational institutions ( BIR Ruling No. DA-40-02 dated March 7, 2002 and BIR Ruling No. 248-88 dated June 6, 1988 ). Likewise, importation of books, films, slides and other educational materials and equipment such as computers to be actually, directly and exclusively used for educational purposes shall be exempt from the value-added tax and customs duties, provided the guidelines under Department Order No. 137-87 in addition to the usual import requirements are observed ( BIR Ruling No. 248-88 dated June 6, 1988 and BIR Ruling No. 130-90 dated July 4, 1990 ). TcIHDa 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group