Oxfam Great Britain-Philippine Branch

June 5, 2008 BIR RULING [DA-345-08] Sec. 105; S-30-077-2007 Oxfam Great Britain-Philippine Branch 95 Malumanay St., Teacher's Village Diliman, Quezon City Attention: Lilian Mercado Carreon Country Programme Manager Gentlemen : This refers to your letter dated November 15, 2007, requesting for exemption from payment of value-added tax (VAT). It is represented that Oxfam Great Britain-Philippine Branch is a non-stock, non-profit corporation duly organized and existing under the laws of United Kingdom; that it is duly registered with the Securities and Exchange Commission under SEC Registration No. 1214 dated July 08, 1988; that it envisions communities of poor women and men benefiting from gainful employment in a safe and peaceful environment, able to cope and recover from natural and human made disasters, have options and are able to act on their decisions as well as contributing to the creation of a better future for all; and that it had been granted tax exemption under BIR Ruling No. RR7-003-154 dated November 11, 2002. cDCaTS In reply, please be informed that pursuant to Section 105 of the Tax Code of 1997, as amended, which provides that any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added (VAT) imposed in Sections 106 to 108 of the same Code. The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. TcSAaH If Oxfam Great Britain-Philippine Branch is engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto, in general, it shall be liable to VAT (BIR Ruling No. S30-27-2003 dated November 21, 2003 & DA-043-2004 dated February 4, 2004). It should be noted, further, that VAT is an indirect tax payable by the seller and not by the purchaser of goods. Being an indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of goods or services sold, it is no longer a tax but an additional cost which the buyer/customer must pay in order to obtain the goods or services. Thus, the shifting of the VAT to Oxfam Great Britain-Philippine Branch does not make it the person directly liable and therefore, it cannot invoke its tax exemption privilege under Section 30 of the Tax Code of 1997, as amended, to avoid the passing on or shifting of the VAT. caADSE Moreover, notwithstanding that it is a non-stock, non-profit corporation, its importation of goods shall nevertheless be subject to the 12% VAT pursuant to Section 107 of the said Code. Thus, it has been ruled in the case of The Camillian Fathers, Inc. that ". . . if your client imports goods, the said importation shall be subject to VAT. . . ." (VAT Ruling No. 119-90 dated May 14, 1990 and BIR Ruling No. DA-043-2004 dated February 4, 2004). Revenue from "contributions, membership dues and donations", not being derived from sale of services or sale of goods made in the course of business but rather in connection with Oxfam Great Britain-Philippine Branch non-stock, non-profit activities, is exempt from the 12% VAT. However, the above exemption from the 12% VAT does not extend to its purchase of goods or properties or services and importation of goods. 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 null and void. HATICc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service