Exemption of PAGCOR from Payment of the 5% Ad Valorem Duty on Importations

August 24, 1989 VAT RULING NO. 209-89 102-469-88 R del Castillo Dental Laboratory c/o Mr. Remigio Abellana 3134-B Bagac Street Manuguit, Tondo Manila S i r s : This refers to VAT Ruling No. 469-88 which answered your letter dated May 17, 1988 where you represented that your dentist-client entered into a partnership with a non-dentist and that the partnership renders dental services and fabricates dentures and castings for the use of the clients of the partnership and for other dentists who pay service fees for their orders. As ruled by the said ruling, the dental services rendered by the partnership are exempt from VAT pursuant to Section 103 (1) of the TAX Code, as amended. As an offshot of the processing of a tax credit claim by your client, a further inquiry is made as to the applicability of the value-added tax on the fabrication and sale of dentures and castings to other dentists. In reply, please be informed that the fabrication of dentures and castings for the clients of the partnership is exempt from VAT since it forms part of the dental service of the partnership. However, if such fabrication is rendered to other dentists on a labor-material basis, it is no longer considered a dental service but a contract service subject to VAT pursuant to Section 102 of the Tax Code as amended. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue