Christian Transformation Foundation, Inc.

April 22, 2009 VAT RULING NO. 005-09 Secs. 106 to 108; VAT Ruling 063-02 Christian Transformation Foundation, Inc. Unit I 21 Flrs. Strata 100 Building Emerald Avenue, Pasig City Attention: Ms. Roweena Ann F. Mendoza Director Gentlemen : This refers to your letter, dated September 6, 2005 which was referred to this Office by Revenue Region No. 7, Quezon City by way of its 2nd Indorsement dated October 25, 2006, requesting that Christian Transformation Foundation, Inc. be exempted from value-added tax (VAT) on its purchases of goods and services from its VAT-registered suppliers. CITaSA It is represented that Christian Transformation Foundation, Incorporated (formerly Christian Microenterprise Development Foundation, Incorporated) is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC);that it is organized for the following purpose(s),to wit: 1) To support Christ Centered ministries through appropriate livelihood development and kingdom building projects and programs; 2) To implement and support livelihood, development and Christian based projects to help uplift the economic, spiritual and physical lives of the poor; 3) To own and operate training and workshop centers and other facilities designed to support livelihood, development and kingdom building activities such as training on church planting and church growth, community development, small business management and development and other analogous programs; 4) To perform other analogous services that will enhance the development work of other like-minded organizations. 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." IcHEaA In stressing the rationale of the above-mentioned rule, this Office elucidates the matter that since a non-stock, non-profit corporation is exempt only from direct taxes such as income tax, as prescribed in Section 30 of the Tax Code of 1997, this exemption can not be extended to indirect taxes like VAT. Accordingly, your purchases of goods and services from VAT-registered suppliers are 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. Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner