VAT Ruling No. 017-02

March 20, 2002 VAT RULING NO. 017-02 Sec. 109 (d) VAT Ruling Nos. 49-97, 12-93 St. Stephen's High School 1267 G. Masangkay St. Manila Attention: Mr. Benito Ong Treasurer Gentlemen : This refers to your letter dated August 13, 2001 requesting for a certification that your acquisition of vehicles, machineries, and equipment for school operational use is exempt from value-added tax (VAT). It is represented that St. Stephen's High School is a non-stock, non-profit educational institution and a tax-exempt corporation and that it is registered as a non-VAT taxpayer. In reply, we regret to inform you that your request cannot be granted for lack of legal basis. The VAT exemption provided under Section 109 (m) of the National Internal Revenue Code of 1997 only pertains to the educational services rendered by private educational institutions but does not include their purchases of goods and services. This is in consonance with Article XIV, Section 4 (3) of the 1987 Philippine Constitution, which provides that "All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties." Thus, while St. Stephen's High School is exempt from VAT, it cannot invoke the same exemption privilege to avoid paying VAT on its acquisition of. vehicles, machineries, and equipment even if intended for school operational use because its exemption covers only taxes for which it is directly liable as a seller of educational services (VAT Ruling Nos. 49-97, 12-93). It does not cover VAT, which is an indirect tax, on its purchases of goods and services from VAT-registered suppliers. 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, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group