BIR Ruling No. 017-12

January 11, 2012 BIR RULING NO. 017-12 Sections 107 (A) and 109 (1) (v) of the National Internal Revenue Code of 1997, as amended. Phil Flora Ornamentals 33 Doa Eva Street, Ireneville I Brgy. BF Homes, Paraaque City 1700 Attention: Romelia G. Cordero Manager Madam : This refers to your letter dated 5 April 2011, requesting for a certificate of tax exemption from Value-added Tax of your business pursuant to Sec. 109 (1) (v) of the National Internal Revenue Code of 1997, as amended. It is represented that you are the registered owner of Phil Flora Ornamentals as evidenced by DTI Certificate No. 01178410 on September 17, 2010. Phil Flora Ornamentals is a non-VAT registered entity engaged in the retail business of flowers and floral ornamental designs. In the course of its operation, Phil Flora Ornamentals imports flowers from Japan. The gross annual income of Phil Flora Ornamentals is not more than One Million Five Hundred Thousand Pesos (P1,500,000.00) It is finally represented that your supplier is requiring you to submit a non-VAT certification. ESTaHC In reply, please be informed that Phil Flora Ornamentals' BIR Certificate of Registration (BIR Form 2303) is more than sufficient proof that your business is a non-VAT entity. Phil Flora Ornamentals' tax type, are as follows: 1. Income Tax; 2. Percentage Tax Monthly. Also, please note that the exemption provided for in Section 109 (1) (v) of the 1997 National Internal Revenue Code, as amended pertains only to "sale", "lease of goods or properties" or the "performance of services" and does not cover importation of goods. With regard to your importation of flowers from Japan, Section 107 (A) of the 1997 National Internal Revenue Code, as amended provides, as follows: "(A) In General. There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) 1 based on the total value sued by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any and other charges, such tax to be paid by the importer prior to release of such goods from customs custody: . . ." (emphasis supplied) As clearly worded in the above cited provision, Value-added Tax is levied, assessed and collected on every importation of goods and the said provision does not provide for any exemption whatsoever. Considering the foregoing, this Office is constrained to deny your request for issuance of certificate of tax exemption on your importation of flowers. DaHcAS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. VAT rate increased to 12% beginning February 1, 2006, pursuant to the provisions of RA 9337.