BIR Ruling [DA-468-05]

November 18, 2005 BIR RULING [DA-468-05] 108 (A); VAT Ruling Nos. 283-88; 220-90; 036-99 Car Options Sales Center, Inc . Araneta Avenue, Quezon City Attention: Mr. Peter Nolasco Gentlemen : This refers to your letter dated May 7, 2005 requesting for confirmation of your opinion that your company, Car Options Sales Center, Inc. ("Car Options"), as a broker engaged in the business of importing motor vehicles for the account of the customers, is liable to pay the value-added tax based on the commission income only and not on the basis of the whole amount of importations. It is represented that Car Options Sales Center, Inc. is engaged in the business of importing motor vehicles from Korea for the account of its customers; that it receives commission from its customers who are the importers themselves; and that the import duties as well as the VAT due on the importation were paid directly by the customers in their name prior to release from customs custody. In reply, please be informed that in the foregoing transaction, only the fee or income received by Car Options from its customers representing commission from services rendered or the brokerage fee shall be subject to the 10% VAT. It is not proper to impose the VAT based on the value of the whole importation since Car Options is not the importer in the said transaction, but merely acts as a broker for the customers. It shall be understood, however, that Car Options shall issue in favor of its customers, who are, in fact, the importers/consignees of motor vehicles, a VAT invoice/receipt corresponding to the amount of brokerage fee in order to prove that it really acts as a broker and receives only commission from the said importation. cTDIaC 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. Very truly yours, (SGD.) JOSE MARIO C. BUAG OIC, Commissioner of Internal Revenue