VAT Ruling No. 023-99

March 11, 1999 VAT RULING NO. 023-99 Sec. 108 (A)-000-000-023-99 Prime Asia Lending, Inc . 3rd Floor, Rivergate Mall Gen. Maxilom Avenue Cebu City Attention: Ms . Virginia Q . Morales Accountant Gentlemen : This refers to your letter dated June 25, 1998 asking for clarification as to whether or not certain registration, documentation and other fees can be claimed as deductions for purposes of computing the value added tax. It is represented that your company is engaged in lending business; and that when you release loans to your clients, you deduct the following fees to cover the actual expenses: 1. Registration fees Registry of Deeds and Land Transportation Office 2. Notarial Fees; 3. Annotation Bees; 4. Documentary Stamp Taxes; 5. Others In reply, please be informed that under Sec. 108(A) of the Tax Code, lending investors are subject to the 10% value-added tax based on their " gross receipts " derived from the sale or exchange of services, including the use or lease of properties. The term " gross receipts " means the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advanced payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding value-added tax. Absent any existing rulings or jurisprudence allowing the above-mentioned actual expenses to be deducted from your gross receipts for purposes of computing the value-added tax due, this Office still holds the view and hereby reiterates that the same cannot be claimed as deductions. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue