Money Payments to the Seminar House for Hosting the BIR Foundation Course Forms Part of their Gross Receipts Subject to 10% VAT; Hence, the 6% Corresponding Creditable VAT Shall be Withheld

March 8, 1996 BIR RULING NO. 039-96 102 (a) 000-00 039-96 MEMORANDUM FOR: The Assistant Commissioner Human Resource Development Service This refers to your Memorandum dated February 1, 1996 requesting for a clarification whether payments in the total amount of One Million Seventeen Thousand Six Hundred Pesos (1,017,600.00) by the BIR for board and lodging provided by the Sacred Heart Novitiate Jesuit Retreat and Seminar House (Seminar House) to the participants of the BIR-Foundation Course conducted by the Career Service Division, this Bureau, are subject to VAT. Pursuant to then Section 113 of the Tax Code, operators of lodging houses were subject to the 12% percentage tax. However, lodging houses are now covered by the EVAT pursuant to Section 102(a) of the Tax Code, as amended by R.A. 7716 and implemented by Revenue Regulations No. 7-95. If the aggregate amount of actual or expected gross receipts in any twelve-month period exceed Five Hundred Thousand Pesos (P500,000.00), the operators of lodging houses are subject to the 10% VAT. The fact that the operator of the Seminar House is a non-stock, non-profit organization enjoying exemption from income tax under Section 26 of the Tax Code, they are nevertheless liable to business tax (CIR vs. Club Filipino, 1-12719, May 31, 1962; CIR vs. Convention of Baptist Churches, L-11807, Jan. 28, 1961). aisadc Accordingly, money payments to the Seminar House for hosting the BIR Foundation Course forms part of their gross receipts subject to the 10% VAT. Hence, the 6% corresponding creditable VAT shall be withheld pursuant to Section 110 (c) of the Tax Code, as amended by R.A. No. 7716. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue