BIR Ruling No. 104-94

May 16, 1994 BIR RULING NO. 104-94 100,102 000 104-94 Punongbayan & Araullo 6/F Vernida IV Building Salcedo Village, Makati Metro Manila Attention: Ms . Rosario S . Bernaldo Tax Partner S i r s : This refers to your letter dated November 16, 1993 in behalf of your client, Sun Holidays, Inc., stating that Sun Holidays, Inc. is a domestic corporation operating the Coco Beach Resort in Puerto Galera, Mindoro; that it will be offering "vacation club membership rights" under a "time sharing" concept to prospective members: that under this scheme, a member will have the right to the exclusive use of a room or suite in Coco Beach Resort; for a week-period designated in the Vacation Club Membership Rights Contracts; that a member will also be entitled to discounts on various facilities and an automatic lifetime membership in a nearby golf and country club; that in exchange for the membership rights, your client will receive (1) membership dues to be paid only once and (2) membership fees to be paid annually; that upon payment of these dues and fees, the member will receive a Vacation Club Membership Certificate and a club card which will evidence his rights to the benefits package. Based on the foregoing, you now request for a ruling confirming your opinion that the membership dues and fees which your client will receive from the sale of membership rights are exempt from the value-added tax. In reply, please be informed that under Section 99 and 100 of the Tax Code, in relation to Section 2(p) of Revenue Regulations No. 5-87, VAT-taxable goods refer to those which are movable, tangible, appropriable or transferable. Accordingly, since membership rights are characteristically intangible property rights, the sales thereof is not subject to value-added tax. Very truly yours, VICTOR A. DEOFERIO, JR. Acting Commissioner