Cost of Spare Parts - Subject to VAT
BIR Ruling No. 308-93 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Jul 8, 1993
Full text
July 8, 1993 BIR RULING NO. 308-93 COST OF SPARE PARTS SUBJECT TO VAT 102-00 183-88 308-93 Provincial Fortune Insurance Corporation 5th Floor RGV Building 5470 South Superhighway Makati, Metro Manila Attention: Mr . Cesar L . Garcia General Manager This refers to your letter dated September 28, 1992 requesting for a clarification whether the cost of spare parts used by a vehicle repair shop to replace damaged or worn out parts of an automobile is subject to value-added tax. In reply, please be informed that the spare parts being supplied by a repair shop to replace the worn out parts of an automobile are in effect materials being supplied with the service. Thus, a vehicle repair shop who provides spare parts to replace damaged or worn out parts of an automobile being serviced or under repair and who bills the customer for both the cost of the service and spare parts is liable to value-added tax for the spare parts because the tax base for purposes of determining the value-added tax liability of the repair shop is the sum of the cost of service and materials as indicated in the definition of gross receipts under Section 102 of the Tax Code. cdtech LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue
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