VAT Ruling No. 004-92

January 8, 1992 VAT RULING NO. 004-92 Alas & Company Maxi-Cool Building 2278 Pasong Tamo Extension Makati, Metro Manila' Attention: Carmencita B. Dinio Tax Services Group M a d a m : This refers to your letter dated October 16, 1990 written in behalf of your client, TIM GROUP CONTAINER TERMINAL CORPORATION, requesting information as to the appropriate tax imposable on the business activities of said corporation, enumerated as follows: a) Operate/manage container yards and container facilities where fees on storage and lift on/off operation are being charged. b) Operate/rent out and control properties and transportation equipment necessary in connection with the activities in (a) above. Trucking fees are being charged from this transport activity. In reply, please be informed that the activity mentioned in (a) involves sale of service; thus, the same is subject to 10% value-added tax pursuant to Section 102 and therefore should be evidenced by a VAT' invoice. With respect to activity stated in (b), the same is subject to 3% tax on carriers pursuant to Section 115, said activity being transport contracting activity. It is mandatory, however, for this latter activity to be covered by a non-VAT invoice to fall under Section 103(j). Moreover, it is noteworthy that the input tax on the purchases of goods and services which cannot directly be identified to either activity must be apportioned between the two activities and the portion attributed to the exempt activity should not be allowed as a creditable input tax but rather should be treated as either an expense or addition to the cost of acquiring an asset used in the exempt activity. EScaIT Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue