Missionaries of the Child Jesus

February 20, 2007 VAT RULING NO. 001-07 Sec. 105 BIR VAT Ruling #063-02 Missionaries of the Child Jesus Amapola corner Estrella Street Makati City Attention: Sr. Ma. Leonora A. Pataueg, MCJ Superior General Gentlemen : This refers to your letter dated May 29, 2006 which was referred to this Office by Revenue District Office No. 49, North Makati, by way of its 1st Indorsement dated June 14, 2006, requesting clarification on the tax treatment for value-added tax (VAT) purposes of the purchases of goods and services from VAT-registered entities like PLDT, Meralco, Water Utility Companies, etc., by Missionaries of the Child Jesus. It is represented that the Missionaries of the Child Jesus, aside from being an apostolate in purely religious-catechists in favor of children, youth, adults and parents in socio-economically depressed areas, has other related works of mercy for the benefit of the needy. In reply thereto, please be informed that this Office had already occasion to rule on the matter when it said in BIR VAT Ruling No. 063-02 dated September 16, 2002 , 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 purchases of goods or services . . . are not exempt from VAT." In stressing the rationale of the above-mentioned rule, this Office elucidates the matter that since a non-stock, non-profit religious corporation is exempt only from direct taxes such as income tax, as prescribed under Section 30 of the Tax Code of 1997, this exemption can not be extended to indirect taxes like VAT. Accordingly, its purchases of goods and services from a VAT-registered entity is nevertheless subject to VAT as imposed under Sections 106 to 108 of the Tax Code of 1997, as amended by Republic Act No. 9337, as implemented by Revenue Regulations No. 16-2005. EcIaTA Thank you. Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner