BIR Ruling No. 006-15

January 20, 2015 BIR RULING NO. 006-15 Secs. 105 & 109 of the Tax Code of 1997 TMP Garments Blk. 21, Lot 21-A Romuluz St., Talon Dos, Las Pias City Attention: Pauline Castillo Akamatsu Owner Madam : This refers to your letter in behalf of TMP Garments (TMP) dated 21 June 2013 requesting for exemption from Value Added Tax (VAT) for purposes of your accreditation in the I-CARE program of the Bureau of Customs (BOC). SCEHaD It appears that TMP, with Tax Identification Number 163-677-851-000, is a sole proprietorship business engaged in the business of manufacture of garments and is registered in the name of Pauline Castillo Akamatsu under Certificate No. 01890577 dated 13 December 2012 issued by the Department of Trade and Industry (DTI). TMP is registered with the Bureau of Internal Revenue (BIR) under Certificate of Registration Number 9RC0000357201 dated 29 August 2008. In reply, please be informed 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 tax (VAT) imposed in Sections 106 to 108 of the Tax Code of 1997 to wit: SEC. 105. Persons Liable. 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 tax (VAT) imposed in Sections 106 to 108 of this Code. xxx xxx xxx Moreover, if the gross annual sales and/or receipts of the taxpayer do not exceed One million five hundred thousand pesos (P1,500,000), 1 he is exempt from the payment of VAT under Section 109 (1) (V) of the Tax Code of 1997 to wit: SDaHEc 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 (V) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Five Hundred Thousand pesos (P1,500,000): 2 Provided, That not later than January 31, 2009 and every three (3) years thereafter, the amount herein stated shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO). xxx xxx xxx Section 116. Tax on Persons Exempt from Value-Added Tax (VAT) . Any person whose sales or receipts are exempt under Section 109(z) 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: Provided, That cooperatives shall be exempt from the three percent (3%) gross receipts tax herein imposed. From the foregoing, it is clear that if a taxpayer's gross annual sales and/or receipts exceed the amount of One Million Five Hundred Thousand pesos (P1,500,000), 3 then he is subject to VAT. Applying the same to the case at hand, it is clear that TMP cannot be exempt from VAT even if it is registered as a Non-VAT Taxpayer. Thus, the request for issuance of VAT Exemption is hereby denied for lack of merit. 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.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Now P1,919,500.00 effective January 1, 2012 (RR 16-2011). 2. Ibid. 3. Ibid.