BIR Ruling [DA-728-06]

December 18, 2006 BIR RULING [DA-728-06] BIR Ruling No. S-30-100-2000; Secs. 105, 109 (R), NIRC Rogationist College St. Anthony's Boys Village Lalaan 2, Silang Cavite Attention: Fr. Mariano Rondael, Jr. Rector Gentlemen : This refers to your letter dated September 5, 2006, requesting for a certification from this Office for the purpose of VAT exemption on your purchases of goods and services. It is represented that Rogationist College (" Rogationist " for brevity) is currently enjoying exemption from taxes and duties as a non-stock, non-profit educational institution by virtue of a certification to this effect issued by the BIR on April 3, 1989. Rogationist would now like this Office to confirm its opinion that such exemption extends not only to its revenues and assets actually, directly and exclusively used for educational purposes, but also to its purchases of goods and services. In reply, please be informed that Section 105 of the Tax Code of 1997, as amended by Republic Act (RA) No. 9337, 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 Section 106 to 108 of the same Code. SDTaHc 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. Accordingly, despite being a non-stock, non-profit educational institution, Rogationist will nevertheless be subject to the value-added tax if it engages in the regular conduct or pursuit of a commercial or economic activity, including transactions incidental thereto. (BIR Ruling No. S-30-100-2000 dated December 26, 2000). In addition, the exemption granted to Rogationist under its certification only covers its liability for income and real estate taxes and does not apply to the VAT which is passed on to it by sellers/suppliers of goods, properties and services. However, Rogationist is deemed exempt from VAT on its purchases/importation of books and other materials for educational purposes, except school supplies, in accordance with Section 109 (R) of the same Tax Code. DEcITS Accordingly, your request is hereby denied for lack of legal basis. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service