VAT Ruling No. 023-92

March 11, 1992 VAT RULING NO. 023-92 NIRC Sec. 100 (A) (2) 102 (A) (3) Precedent Ruling 112-90 Girl Scouts of the Philippines National Headquarters 901 Padre Faura St. Ermita, Manila Attention: Ms. Milagros Araneta Villasor National President Mesdames : This refers to your letter dated July 23, 1991 requesting reconsideration of VAT Ruling No. 112-90 issued to you dated May 14, 1990 confirming your VAT exemption on activities your organization directly undertakes. In connection thereto, you now request that such exemption from VAT be extended such that GSP may not be subject to VAT which may be passed on to it by its suppliers of goods and services. In effect you requested for zero-rating of your purchase of goods and services.. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. Your tax exemption privilege under Commonwealth Act No. 542, as amended by R.A. No. 4375, P.D. No. 720 and E.O. No. 267 covers only taxes for which you are directly liable and does not extend to indirect taxes, like VAT and other percentage taxes, which may be passed on to you by your suppliers of goods and services. You cannot invoke the provisions of Sections 100(a)(2) and 102(a)(3) of the Tax Code, as amended, for the reason that these refer to sales by VAT-registered persons to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subject such sales to zero-rate. In other words, to be entitled to effectively zero-rated sale, the person or entity must specifically enjoy exemption not only from direct taxes but indirect taxes as well. In which case the tax exemption granted under special law or international agreement shall, in so far as VAT and other indirect taxes are concerned, be extended to the supplier of goods and services. ( Sec. 8(c)(2) R.A. No. 5-87 ) Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue