VAT Ruling No. 008-01

February 21, 2001 VAT RULING NO. 008-01 R.A. 8761 000-00 Alma Brokerage Corporation Rm. 307 Mercantile Insurance Bldg. Gen. Luna corner Beaterio Sts. Intramuros, Manila Attention: Alfredo V . Mata General Manager Gentlemen : This refers to your letter dated July 14, 2000 requesting confirmation that brokers are given the option to maintain their status as a value-added taxpayers due to the following considerations: (1) it will require so much work on the part of the taxpayer; and (2) this is only applicable from March 1 to December 31, 2000, in connection with the enactment of Republic Act No. (RA) 8761 1 (erroneously numbered in your letter as 8764). In reply, please be informed that Sections 1, 3, and 4 of RA 8761 provides as follows: "SEC. 1. Section 5 of Republic Act No . 8424 is hereby amended to read as follows : 'SEC. 5. Transitory Provisions . Effectivity of the Imposition of VAT on Certain Services. The imposition of the value-added tax on the following services shall take effect on January 1, 2001: 'xxx xxx xxx (c) Services rendered by stock real estate, commercial, customs and immigration brokers : Provided , That, for the year beginning January 1 up to December 31, 2000, the aforementioned brokers shall, in lieu of the value-added tax prescribed under Title IV of the NationalInternalRevenueCodeof 1997, be subject to a tax equivalent to seven percent (7%) based on gross receipts from brokering services which shall be paid in the manner and in accordance with the provisions of Title V of the said Code : Provided, further, That beginning January 1, 2001, the aforementioned brokers shall be subject to the value-added tax, in lieu of the seven percent (7%) tax . xxx xxx xxx "SEC. 3. Repealing Clause . All laws, decrees, orders, issuances, rules and regulations and other issuances or parts thereof inconsistent with this Act are hereby repealed or modified accordingly." "SEC. 4. Effectivity . This Act shall take effect on January 1, 2000." It is an elementary rule in statutory construction that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says. The law must be applied regardless of who may be affected, even if it may be harsh or onerous. It is clear from the aforequoted provisions that, beginning January 1 until December 31, 2000, the seven percent (7%) tax on gross receipts from brokering services of stock, real estate, commercial, customs and immigration brokers shall be "in lieu of the value-added tax prescribed under Title IV of the National Internal Revenue Code of 1997 . " Nothing is mentioned about brokers, who are VAT-registered, having the option on not paying the seven percent (7%) tax on their gross receipts. Thus, even when "it will require so much work on the part of the taxpayer" in applying the said law (RA 8761), the 7% percentage tax shall be paid by said brokers "in the manner and in accordance with the provisions of Title V (on other percentage taxes) of the said Code . " Furthermore, it bears stress that RA 8761, as thus clearly worded, took effect on January 1, 2000. In view of the foregoing, we cannot confirm your opinion that the taxpayers (specifically said brokers), affected by the enactment of RA 8761, have the option on maintaining their status as VAT-registered persons. Please be guided accordingly. CTHaSD Very truly yours, (SGD.) RENE G. BAEZ Commissioner of Internal Revenue Footnotes 1. AN ACT IMPOSING THE VALUE-ADDED TAX ON CERTAIN SERVICES BEGINNING JANUARY 1, 2001, AMENDING FOR THE PURPOSE SECTION 5 OF REPUBLIC ACT NO. 8424 AND FOR OTHER PURPOSES.