Implementation of VAT on Income

July 28, 1988 BIR RULING NO. 360-88 102 (a) 000-00 360-88 S i r : This refers to your letter dated March 10, 1988 requesting a ruling regarding the implementation of the value-added tax on your income. In reply, please be informed that as a wholly-owned subsidiary of the Development Bank of the Philippines (DBP) tasked as the sole marketing arm in the disposition of the Bank's acquired assets, the 10% VAT is imposed on the 5% service fee provided that the amount corresponding to it is billed separately. On the other hand, as the sole marketing arm of Land Bank bonds, your company is classified as a broker in its management/arrangement fees. Hence, the value-added tax is imposed on the income, compensation or fee, received by the corporation, provided that such amount is billed separately. However, if the whole amount for both transactions is reflected in the receipt, said amount is subject to VAT. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner