Basis of Computing VAT Derived from Service Income on Providing Temporary Workers to Local Companies

November 29, 1988 BIR RULING NO. 568-88 102 (a) (3) 061-88 568-88 Gentlemen : This refers to your letter dated September 28, 1988 stating that you are an entity involved in providing temporary workers to local client companies. You want to be clarified as to the correct basis of computing VAT derived from such service income. In reply, please be informed that the tax base in computing the value-added tax on the sale of service is gross receipts which means the total amount of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied with the services and deposits for advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding the value-added tax pursuant to Section 102(a)(3) of the Tax Code, as amended by Executive Order No. 273. It is computed simply by multiplying the total gross receipts, exclusive of tax, by 10% and bill separately the result in the invoice. In this connection, we are furnishing you herewith a copy of BIR Ruling No. 363-88 with an illustration of how to compute VAT on sale of services. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner