Whether a Vice President of a Realty Company Subject to VAT

December 26, 1994 BIR RULING NO. 184-94 21 000-00 184-94 Mr. Romeo M. Sulit Italy Avenue cor. Chile St. Greenheights Subd. Concepcion, Marikina Metro Manila S i r : This refers to your letter dated February 28, 1994 stating that you are employed as a Vice President of a realty company engaged in developing and marketing real estate properties; that you are the corporate officer in charge of the sales department, who is responsible in planning, directing and supervising its sales department; that you are paid a basic monthly salary, from which a 5% income tax is withheld and additional compensation of 0.20% based on the sales generated by the sales department; and that said additional compensation is subjected to both 5% creditable withholding for income tax and to the 10% creditable withholding for VAT. LLjur Based on the foregoing representations, you now request information as to whether you are subject to VAT; and if in the negative, what steps to take in order to get a refund thereof. In reply, please be informed that your additional compensation based on 20% of sales generated by the sales department is not subject to VAT because the same did not arise from independent contract, but is the result of your employment as Vice-President of the company. Such being the case, it is not subject to withholding tax for creditable VAT. Moreover, creditable VAT applies in the case of income payments by the Government pursuant to Revenue Regulations No. 10-93, implementing R.A. No. 7649. If in the foregoing case, VAT has in fact been withheld and remitted to this Bureau, you may file an application for the refund by accomplishing BIR Form No. 12.57 and forwarding a letter for that purpose, to the Appellate Division for factual investigation and recommendation. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirement imposed in this letter are not complied with, then this ruling shall be considered null and void. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue