BIR Ruling [DA-335-00]

August 30, 2000 BIR RULING [DA-335-00] Philippine Public Safety College Fort Bonifacio, Makati City Attention: Ernesto B . Gimenez, MD, MNSA President, PPSC Gentlemen: This refers to your letter dated August 16, 2000 stating that the P hilippine Public Safety College (PPSC) , in collaboration with the International Managers of Police Academy and College Training (IMPACT) Section for Asia-Pacific Region of the International Association of Chiefs of Police (IACP), will hold the 2nd Asia-Pacific Conference on Police Education and Training on August 21-23 at the Makati Shangri-La Hotel in Makati City; that the conference aims to provide new concepts in the field of police education and training; that since PPSC will hold the said event, it was advised by Shangri-La Hotel management to seek VAT exemption in order to lessen hotel bills for the three-day conference; hence, the instant request for VAT exemption certificate. In reply, we regret to inform you that your aforesaid request can not be granted for lack of legal basis. There is nothing in Section 68 of Republic Act No. 6975 expressly exempting PPSC from taxes. In the absence of a tax exemption provision, no exemption can be granted by this Office. Exemptions from taxation are highly disfavored in law; and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from taxation can not be permitted to exist upon vague implications. (Davao Light and Power Co., Inc. vs. Comm. of Customs, L-28731, 28902, March 29, 1972) Moreover, even if PPSC enjoys exemption from direct taxes, e.g., income tax, still it cannot claim exemption from the 10% VAT on its purchases of goods/services. This is so, because VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services. (Section 105, Tax Code of 1997) Accordingly, Shangri-La Hotel can legally pass on the 10% VAT to PPSC as part of the cost of goods/services rendered to the latter. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group