Exemption of the Free Goods given on Account of Sale from VAT
BIR Ruling No. 245-88 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Jun 6, 1988
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June 6, 1988 BIR RULING NO. 245-88 100 000-00 245-88 Gentlemen : This refers to your letter dated February 19, 1988 stating that you are a distributor of various supermarket items; and that it has been your trade practice to give free goods to customers in order to promote sales efforts. You now request information as to whether the free goods given on account of sale are subject to VAT. In reply, please be informed that the value-added tax imposed under Section 100 of the Tax Code, as amended by Executive Order No. 273 is based on the gross selling price of the goods sold. The goods given free in the course of trade or business are not considered transaction deemed sale. Thus, in your illustrative example, the 10% value-added tax is based only on the P1,000.00 which is the price of the 10 cases of catsup. (Unnumbered Ruling dated April 25, 1988) cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner
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