Requirement for Municipality of San Pedro, Laguna to Register as VAT Taxpayer

November 8, 2000 BIR RULING NO. 060-00 RR6-97 000-00 Office of the Mayor San Pedro, Laguna Attention: Mayor Felicisimo A . Vierneza Gentlemen : This refers to your letter dated May 25, 1999 requesting for a certification that the Municipality of San Pedro, Laguna is exempt from value-added tax registration requirements in view of the fact that it is a local government unit. In reply, please be informed that Section 105 of the Tax Code of 1997 as implemented by Section 6, Revenue Regulations No. 6-97 as amended by Revenue Memorandum Circular No. 5-99 provides that "(a) In general . Any person who sells, barters, exchanges, leases goods or properties and renders services subject to VAT imposed in Secs. 100 and 102 (now Sec. 106 and 108) of the Code shall register with the appropriate Revenue District Officer (RDO) using BIR Form No. 1556 and pay an annual registration fee in the amount of Five Hundred Pesos (P500.00) [then P1,000.00] beginning 1998, the date of effectivity of Republic Act No. 8424 using BIR Form No. 1558 for non-computerized Revenue District Offices and BIR Form No. 0605 for computerized Revenue District Offices for every separate or distinct establishment or place of business before the start of such business and every year thereafter on or before the 31st day of January. "xxx xxx xxx "(b) Mandatory "(1) Pesos Covered . Every person who, in the course of trade or business, sells, barters, exchanges, leases goods, properties or renders services is subject to VAT, if the aggregate amount of his actual or expected gross sales and/or gross receipts exceeds Five Hundred Fifty Thousand Pesos (P550,000.00) which amount shall be adjusted to its present value every year thereafter using the Consumer Price Index, as published by the NSO. "In the course of trade or business" means the regular conduct or pursuit of a commercial or economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity . DETACa In view of the foregoing, there is no automatic exemption from value-added tax registration requirements of local government units. For as long as a government entity sells, barters, exchanges, leases goods, properties or renders services in the course of trade or business, it is required to register as a VAT taxpayer. Accordingly, if the local government of San Pedro, Laguna falls within the above provision (i.e., in the performance of its proprietary functions), it is required to register as a VAT taxpayer otherwise, it is not. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue