Syquia and Syquia Law Offices

September 9, 2009 BIR RULING [DA-(VAT-081) 519-09] Section 113 Syquia and Syquia Law Offices Ayala Avenue, Makati City Attention: Atty. Jose Tomas C. Syquia Gentlemen : This refers to your letter dated June 19, 2009 requesting on behalf of your client, GRAND ASIAN SHIPPING LINES, INC., for legal opinion that the value-added tax (VAT) is presumed to be included in the total invoice amount in the sales invoice or official receipt when the VAT is not shown as a separate item. It is represented that GRAND ASIAN SHIPPING LINES, INC. engaged the services of Keppel Batangas Shipyard, a domestic company that is VAT registered, for the drydocking and repair of its vessel, MT "Magallanes". Your client paid the said services by issuing postdated checks and was issued official receipts with no separate itemization for the value-added tax. In reply, please be informed that Section 113 of the Tax Code provides: "SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. aHSAIT (A) Invoicing Requirements. A VAT-registered person shall issue: (1) A VAT invoice for every sale, barter or exchange of goods or properties, and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. (B) Information Contained in the VAT Invoice or VAT Official Receipt. The following information shall be indicated in the VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); aASDTE (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, that: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt ; (emphasis supplied) xxx xxx xxx" Moreover, Revenue Memorandum Circular No. 62-05 clarifies the information that must be contained in the VAT invoice or VAT official receipt: Q16 How is the Value Added Tax presented in the receipt/invoice? A16 The amount of the tax shall be shown as a separate item in the invoice or receipt. DHTECc Sample: Sales Price P100,000.00 VAT 10,000.00 Invoice Amount P110,000.00 ========= Revenue Regulations No. 16-05 provides in part: "SECTION 4.106-4. Meaning of the Term "Gross Selling Price". The term "gross selling price" means the total amount of money or its equivalent which the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods or properties, excluding VAT. The excise tax, if any, on such goods or properties shall form part of the gross selling price. . . . If the VAT is not billed separately, the selling price stated in the sales document shall be deemed to be inclusive of VAT. " (emphasis supplied) THacES In view of the foregoing, the official receipt issued by Keppel Batangas Shipyard is presumed to have included the value-added tax in the total invoice amount since the value-added tax is not shown as a separate item. 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service