BIR Ruling [DA-450-03]

December 5, 2003 BIR RULING [DA-450-03] 106 VAT Ruling Nos. 30-99; 67-2001 Pacific Office Machines, Inc . Pacific Office Machines Building, 28 E. Delos Santos Avenue, Greenhills, San Juan Attention: Mr. Arnel C. Viaviles Manager, Credit & Collection Department Gentlemen : This refers to your letter dated July 22, 2003 requesting for a ruling stating that PAGCOR is no longer exempt from VAT. It is represented that Pacific Office Machines, Inc. has just sold to Philippine Amusement & Gaming Corp. ("PAGCOR") 43 units of IBM Netvista Personal Computers amounting to P2,275,173.00 under Invoice No. MN127280 last January 29, 2003; that since PAGCOR is claiming that it is VAT exempt, the said amount is exclusive of 10% VAT which is equivalent to P227,517.30; and that your application with BIR for VAT zero rate for this transaction was disapproved on the ground that PAGCOR is no longer exempt from VAT. DTAHSI In reply, please be informed that in VAT Review Committee Ruling No. 030-99 dated March 18, 1999, it has been ruled that all legislative franchise grantees, except only "electric, gas and water utilities" have been expressly subjected to the 10% VAT pursuant to Section 102 of the National Internal Revenue Code of 1977, as amended by Republic Act (R.A.) No. 7716 (now Sec. 108, National Internal Revenue Code of 1997). It is equally clear that R.A. No. 8241 did not restore the old tax exemption privilege of PAGCOR under its legislative franchise because its amendment as far as franchise grantees are concerned is limited only to "radio and/or television broadcasting." Therefore, upon effectivity of Section 102 (now Sec. 108) of the NIRC, as amended by R.A. No. 7716, PAGCOR ceased to be embraced by the franchise tax. Instead, it became subject to the 10% VAT, in lieu of all other taxes, pursuant to Sec. 13, of Presidential Decree (P.D.) No. 1869 (i.e. PAGCOR's Charter), as amended by Sections 3 and 12 of R.A. No. 7716 . Accordingly; this Office reiterates its aforestated VAT Review Committee Ruling No. 030-99 that PAGCOR is now subject to the 10% VAT. ECSaAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group