VAT is Not Subject to Any Withholding-Tax-at-Source and Remittance Provisions Under E.O. No. 273

May 15, 1991 BIR RULING NO. 083-91 51-00 m 581-88 083-91 S i r : This refers to your letter dated February 25, 1991, in effect, requesting clarification as to whether or not the income payor is authorized to withhold the 10% VAT. It is represented that you entered into an agreement with P.C. Tario Realty and Management Corporation (P.C. Tario for short) with principal office at the 3rd Floor, Eurasia Bldg., Ayala Avenue, Makati, Metro Manila, to sell condominium units of Bohol Mansions located at 41 Scout Albano cor, Scout Esguerra, Quezon City; that Bohol Mansions is owned by Arcontica Condominium Corporation which appointed P.C. Tario as its exclusive marketing arm to exclusively sell Bohol Mansions units; that you have sold for the year 1990 five (5) condominium units for which you earned a commission of P223,889.16; that P.C. Tario withheld the 10% VAT and the 5% expanded withholding tax so that you only received the net amount of P193,042.91 as computed below: cdt Commission P223,889.16 Less: 10% VAT Withheld at source 20,353.56 5% expanded withholding tax 10,492.69 Net amount received P193,042.91 ========= In reply, please be informed that the value-added tax, imposed under E.O. No. 273 has replaced the sales tax, contractor's tax, miller's tax and broker's tax effective January 1, 1988. However, unlike the adverted percentage taxes, the value-added tax cannot be fixed, determined, computed or ascertain at the time of the money payment; hence, the same is not subject to any withholding-tax-at-source and remittance provisions. (see BIR Ruling No. 581-88; RMC 18-88). cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner