VAT Ruling No. 020-96

September 23, 1996 VAT RULING NO. 020-96 Sec. 102 (a)-000-020 Caltex (Philippines) Inc. 6/F 6750 Ayala Avenue 1226 Makati City Attention: Ms . Catherine T . Manahan Tax Counsel Gentlemen : This refers to your letter dated February 5, 1996 requesting for a formal clarification as to whether your business of leasing out real property which is merely incidental to your main line of business of manufacturing, distributing, and selling of petroleum products, is subject to VAT. cdpr It is represented that Caltex Philippines, Inc., whose main line of business is manufacturing, distribution and selling of petroleum products, a VAT exempt activity, owns real properties and leases out the same. On this basis, it is your opinion that the leasing activity should not be subject to VAT inasmuch as the same is merely incidental to the main line of business which is exempt from VAT. In reply, please be informed that your leasing activity is a business activity which can be conducted independently from your VAT-exempt business. Moreover, it is an activity that is separately subject to VAT under Section 102(a) of the Tax Code, as amended by Republic Act No. 7716. Such being the case, your rental income from your leasing activity is subject to VAT. prll Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue