Servants of Jesus of Charity

November 26, 2008 BIR RULING [DA-(VAT-046) 464-08] Sec. 30 & 106; 248-88; DA-040-02; S30-027-2003 Servants of Jesus of Charity 2652 Maytubig St., Malate Manila Attention: Ma. Lourdes Dela Hoz Mother Provincial General Mesdames : This refers to your letter dated October 7, 2008 requesting, in effect, exemption from the payment of value-added tax (VAT) on the shipment of 1 x 20' and 1 x 40' container, set to contain two (2) units of elevator, by The Local Superior of the Religiosas Siervas De Jesus De La Caridad, Inc. or popularly known as the "Servants of Jesus of Charity", a non-stock, non-profit religious organization exempt from the payment of income tax pursuant to Section 30 (E) of the Tax Code of 1997, as amended. IcCDAS In reply thereto, please be informed that the exemption provided for under Section 30 (E) of the Tax Code of 1997, as amended, pertains only to income tax. Thus, business taxes, such as the value-added tax, are not covered by the said exemption. If the Servants of Jesus of Charity will engage in the regular conduct or pursuit of a commercial or economic activity, including transactions incidental to its purposes, it will be subject to VAT. The above exemption from income tax does not extend to activities conducted by religious organizations involving sale of goods and services which are subject to the 12% VAT imposed under Section 106 of the same Code. (BIR Ruling No. 248-88 dated June 6, 1988; BIR Ruling No. DA-040-02 dated March 7, 2002; and BIR Ruling No. S30-027-2003 dated November 21, 2003). On the other hand, the purchases of the organization, i.e. , materials or equipment for its building, are subject to the 12% VAT imposed under Section 106 of the Tax Code of 1997, as amended. Such tax payment may legitimately be passed on to customers like non-stock, non-profit organizations or foundations. (BIR Ruling No. 248-88 dated June 6, 1988) 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