BIR Ruling No. 373-11

October 14, 2011 BIR RULING NO. 373-11 Section 109 (H) of the Tax Code of 1997; BIR VAT Ruling No. 049-98 Development Academy of the Philippines DAP Building, San Miguel Avenue Pasig City Attention: Mr. Antonio D. Kalaw, CESO I President Gentlemen : This refers to your letter dated June 28, 2011 stating that the Development Academy of the Philippines (DAP) is a government educational institution which was created and established pursuant to Presidential Decree (PD) No. 205 dated June 6, 1973; that it is mandated, among others, to promote, carry on and conduct scientific, interdisciplinary, and policy-oriented research, education, training, consultancy and publication in the broad fields of economics, public administration, and the political and social sciences; that pursuant to its mandate, the DAP offers the following services: training, education, policy action/oriented research, and advisory or consulting services; that DAP's educational services cover both graduate degree and certificate courses; that among its graduate degree programs are: Master in Public Management (MPM) Regular and Major in: Energy Management, Biodiversity Conservation, Development and Security, Health Systems and Development, Integrity Development in Governance, and Local Governance and Development; Master in Productivity and Quality Management; and Master in Organization Development-Transformation Management that the status of the DAP as an educational institution was affirmed by the Department of Justice in its Opinion No. 15 (s. 1992); and that the Government Corporate Counsel Raoul C. Creencia, in OGCC Opinion No. 121 (s. 2011), has held that the Academy's Graduate School is a government educational institution. ISCDEA Based on the foregoing representations, you now request for exemption from the payment of value-added tax (VAT) pursuant to Section 109 (H) of the Tax Code of 1997, as amended, implemented by Revenue Regulations No. 16-2005, as amended. In reply thereto, please be informed that Section 109 (H) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, as amended, provides "SEC. 109. Exempt Transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. xxx xxx xxx (H) Educational services rendered by private educational institutions, duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA) and those rendered by government educational institutions; xxx xxx xxx" In stressing the rationale of the above-cited provisions, this Office had already occasion to rule on the matter when it said in BIR VAT Ruling No. 049-98 dated December 2, 1998 , as follows: ". . . Such being the case, considering that the DAP has been held to be a government educational institution, its gross receipts derived from rendering educational services and other activities incidental thereto are exempt from the VAT pursuant to Section 109 of the Tax Code, as amended. With respect, however, to its gross receipts on activities other than educational services and from those which are incidental thereto, such as consultancy services, etc., please be informed that the Academy is subject to VAT imposed under Section 108 of the Tax Code of 1997. The tax exemption of the Academy under Section 12 of Presidential Decree No. 205 may no longer be invoked as the same has been revoked by Executive Order No. 93 issued sometime in November 1986." aHATDI SUCH BEING THE CASE, this Office holds that DAP, as a government educational institution, its gross receipts derived from rendering educational services and other activities incidental thereto are exempt from the 12% VAT pursuant to Section 109 (H) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, as amended. However, it is to be emphasised that the above exemption from the 12% VAT does not extend to its purchase of goods or properties or services and importation of goods. Hence, notwithstanding that DAP is a non-stock, non-profit government educational institution, its purchase of goods or properties or services and importation of goods shall nevertheless be subject to the 12% VAT pursuant to Sections 106, 107 and 108 of the said Code, as amended by R.A. No. 9337. (VAT Ruling No. 119-90 dated May 14, 1990 and BIR Ruling No. DA-043-2004 dated February 4, 2004). SDHacT 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, or that the requirements herein stated are not complied with, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue