Atty. Maria Lourdes R. Reyes

December 5, 2007 BIR RULING [DA-612-07] DA 255-06 Atty. Maria Lourdes R. Reyes 131 F. Manalo Street San Juan City M a d a m : This refers to your letter dated September 27, 2007 stating that your client, Culinary Institute of Aristocrat, Inc. (CIA), is a domestic corporation duly organized and existing under the laws of the Philippines and is registered with the Securities and Exchange Commission (SEC); that its primary purpose is to train food service personnel on technologically advanced and scientific cooking and baking practices; to improve product lines and its quality; to develop among service managers proficiency in modern managerial practices; to impart innovative techniques and cost-effective measures in industrial housekeeping; to provide laboratory facilities to educational institutions and improve food sciences, education and sanitary practices as well; to extend technical assistance through customized training programs and the like to hotels, food service and allied industries and provide library services to their personnel; and to affiliate with other educational, local or foreign, institutions and conduct extension classes anywhere; and that on September 25, 2006, the Technical Education and Skills Development Authority (TESDA) granted CIA the authority to offer the program in Commercial Cooking NC II under Certificate of TVET Program Registration WTR No. 0613022113 dated September 25, 2006. SCHcaT Based on the foregoing representations, you now request for a ruling that CIA, as a TESDA recognized or accredited institution, is exempt from value-added tax (VAT) under Section 109 (H) of Republic Act (R.A.) No. 9337, as implemented by Revenue Regulations No. 16-2005, as amended; and to the 3% percentage tax. In reply thereto, please be informed that Section 109 (H) of R.A. No. 9337 provides that "Sec. 109. Exempt Transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (H) Educational services rendered by private educational institutions duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA) and those rendered by government educational institutions." DHIcET Corollarily, Section 116 of the Tax Code of 1997 provides that "Sec. 116. Tax on Persons Exempt from Value-added tax (VAT) . Any person whose sales or receipts are exempt under Section 109(v) of this Code from the payment of value-added tax and who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts . . . ." In BIR Ruling No. DA-255-06 dated April 12, 2006 , this Office ruled that ". . . MTC-Academy-Paraaque City, a TESDA recognized or accredited institution is exempt from VAT pursuant to Section 109(H) of the Tax Code of 1997, as amended by R.A. No. 9337." SUCH BEING THE CASE, this Office holds that CIA, a TESDA recognized and accredited institution, is exempt from the 12% VAT and likewise not subject to the 3% percentage tax imposed under Section 116 of the Tax Code of 1997, as amended. TCaADS 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service