Exemption from VAT

April 12, 1989 BIR RULING NO. 071-89 26 (e) 314-88 071-89 Gentlemen : This refers to your letter dated November 16, 1988 stating that your client, Healthworld, Incorporated is a domestic corporation engaged in physical fitness program and maintain physical fitness equipment and facilities; that your client gives instruction to each member on how to use the different equipment and facilities to attain physical fitness; and that for such services and facilities, your client receives monthly membership fees and one-time entrance fee. Based on the foregoing representation, you now request information on the following queries: "1. Under the present National Revenue Code, what are the kind of taxes our client is liable to pay? "2. Under Executive Order No. 273, is our client covered by the VAT system? casia "3. What are the kind of taxes our client is liable to pay under Executive Order No. 273? In reply, please be informed that the abovementioned activities of your client do not constitute sale of services within the purview of Section 102(a) of the Tax Code as implemented by Section 2(j) of Revenue Regulations No. 5-87.Accordingly, it is not subject to the value-added tax imposed by Section 102 of the Tax Code, as amended by Executive Order No. 273. However, your client is subject to income tax under Section 24(a) of the same Code. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner