VAT Ruling No. 009-05

June 23, 2005 VAT RULING NO. 009-05 Section 105; 027-2003 National Association of Dental Traders, Inc. Suite 1408 State Center Bldg. 333 Juan Luna Street, Binondo, Manila Attention: Ms. Imelda Diu President, NADTI Gentleman : This refers to the 1st Indorsement of the Chief, Legal Division, Revenue Region No. 6, Manila, dated September 11, 2003, relative to your request for exemption from the value-added tax (VAT) as non-stock, non-profit corporation. Based on the documents which you submitted, it appears that National Association of Dental Traders, Inc . is duly registered with the Securities and Exchange Commission on September 5, 2000 under SEC Registration No. A200013568; that the purpose or purposes for which the corporation was formed are as follows: "1. To provide a medium for initiating, assisting and undertaking, or otherwise helping in the promotion and development of the dental trade and the practice of dentistry in the Philippines; 2. To unify all dental suppliers, dealers, manufacturers and related trade organization for effective, efficient, coordinated and cooperative endeavors for the common good; 3. To secure and make available such materials and facilities as are necessary or convenient for the advancement of the dental trade; to conduct and/or sponsor studies, seminars, and conferences on contemporary situations and trends, both in the dental trade and the profession; 4. To encourage, initiate or otherwise undertake promotional educational and information campaigns on modem technical and scientific developments in the dental trade and profession; 5. To establish and maintain liaison with the Philippine Dental Association and its affiliate organizations dental schools and colleges, the appropriate government offices and/or its instrumentalities and other organization; and 6. To support the expansion, development, operation and maintenance of the purpose of the association and to do and perform any and all acts not contrary to law but necessary and appropriate for the attainment of any and all of its purposes and objectives." ICHcaD and that no part of the income which the association may obtain as an incident to its operation shall be distributed as dividends to its members, trustees or officers. In reply, please be informed that under Section 105 of the Tax Code of 1997, " Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of the said Code . . ." The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Accordingly, despite its being a non-stock, non-profit corporation, the National Association of Dental Traders, Inc . shall be subject to the 10% value-added tax if it engages in the regular conduct or pursuit of a commercial or economic activity, including transactions incidental thereto. (BIR Ruling No. S-30-027-2003 dated November 21, 2003) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group