INAHGEN, The Farmers Congress

December 8, 2009 BIR RULING [DA-(VAT-107) 749-09] VAT Ruling No. 119-90 & BIR Ruling No. DA-043-2004 INAHGEN, The Farmers Congress Unit 1629 Mega Plaza Condominium ADB Ave. cor. Garnet Road Ortigas Center, Pasig City Attention: Mr. Danilo A. Sanchez Event Over-all Chairman Gentlemen : This refers to your letter dated November 12, 2009 requesting for VAT exemption on your payment for the lease of SMX Convention Center. As represented, the 3rd Inahgen (International Animal Health Genetics and Nutrition Congress), The Farmers Congress was held on February 3, 4 and 5, 2009 at SMX Convention Center, SM Mall of Asia Complex, Pasay City. Inahgen2009 is the Philippines' largest and most prestigious agribusiness exhibition. This was participated in by livestock and poultry industry leaders from the Philippines and from around the world. The event was primarily conceptualized with strong focus on the swine and poultry industries; considered as highly significant subsectors of the Philippine agriculture. The trade show showcased the latest trends and innovations in livestock and poultry products, information, services and equipment. It focused on animal health, genetics, and nutrition. Invited conference and seminar speakers talked about the latest research, commercial findings, breeding technologies, medications, and other interesting topics in a world class seminar area. This well-attended bi-annual event provided excellent business and networking opportunities and also featured educational programs, farmers meeting, linkages among major industry players here and abroad and culminated in a world-class live boar auction sale and live animal display. The event was organized by the Philippine Veterinary Drug Association (PVDA) and the Philippine Swine Industry Research and Development Foundation Inc. (PSIRDFI). CTEaDc PVDA Foundation Inc. is a non-stock, non-profit association registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200813578 dated September 4, 2008. The tax exemption granted to a non-stock, non-profit corporation under Section 30 of the Tax Code of 1997 covers only income taxes for which it is directly liable. It should be noted that VAT is an indirect tax payable by the seller and not by the purchaser of goods. However, being an indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of goods or services sold, it is no longer a tax but an additional cost which the buyer/customer has to pay in order to obtain the goods or services. Assuming for the sake of argument that Inahgen is an exempt entity under Section 30 of the Tax Code of 1997, the shifting of the VAT by SM to Inahgen does not make Inahgen the person directly liable. Therefore, Inahgen cannot invoke its tax exemption privilege under Section 30 of the Tax Code of 1997 to avoid the passing on or shifting of the VAT. 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