BIR Ruling No. 469-11

December 5, 2011 BIR RULING NO. 469-11 Section 105 of the National Internal Revenue Code of 1997, as amended; BIR VAT Ruling No. 005-09 dated April 22, 2009; and BIR VAT Ruling 063-02 dated September 16, 2002. Sibling's Mini Market 72 Benitez Street, Pasadena San Juan City, Metro Manila Attention: Queenie Alejandro Proprietor Gentlemen : This refers to your letter dated March 4, 2011 wherein you requested for a "Special Ruling" to exempt your business from Value-Added Tax on purchase of services. It is represented that SIBLING'S MINI MARKET is similar to a barangay mini wet market; that you are projecting to cater and sell perishable goods like breads, delicacies, fruits, vegetables, meat and meat products to a neighborhood along Barangay Pasadena; that your business does not charge 12% VAT to your customers, as the goods you sell are highly perishable and some are raw goods. In support of your request for exemption, you attached the following documents: 1. Photocopy of BIR Certificate of Registration (BIR Form 2303); 2. Photocopy of BIR Payment Form 0605; 3. Photocopy of Land Bank BIR Tax Payment Deposit Slip; 4. Photocopy of Official Receipt issued by the Office of the Treasurer, City of San Juan; 5. Photocopy of Permit to Operate issued by the Office of the City Mayor of San Juan. In reply, please be informed that, as provided for under the law, it is the person who sells, barters, exchanges, leases goods or properties and renders services that is liable to pay value-added tax. However, the law further provides that value-added tax is an indirect tax. Being an indirect tax, the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. DCESaI The pertinent portions of Section 105 of the National Internal Revenue Code of 1997, as amended, are as follows: "Section 105. Persons Liable. Any person who , in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code. The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. . . ." (emphasis supplied) Also, this Office had the occasion to rule in BIR VAT Ruling No. 005-09 dated April 22, 2009, citing an earlier ruling, that ". . . VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. Accordingly, your purchase of goods or services . . . are not exempt from VAT." (BIR VAT Ruling 063-02 dated September 16, 2002) Based on the present law and BIR rulings, the exemption from value-added tax or taxability of purchaser therefore depends upon the person selling and not on the person purchasing. In view of the foregoing, your request for exemption from payment of VAT relative to your purchase of services is hereby denied for lack of legal basis. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue