VAT Ruling No. 029-96

October 30, 1996 VAT RULING NO. 029-96 Sec. 103-000-029 Jesus is Lord Church 1832 San Marcelino St. Malate, Manila Attention: Ms . Riza R . Laurente Director for TV/Radio Ministry Gentlemen : This refers to your letter dated April 1, 1996 requesting for clarification on the taxability of your religious organization vis-a-vis the Value Added Tax pursuant to the provisions of Republic Act No. 7716 otherwise known as the Expanded Value Added Tax Law. In reply, please be informed that the EVAT law covers regular business activities of selling goods or properties or selling of services. The operation of your organization being non-stock, non-profit and religious one cannot be considered as being in business as contemplated under the law. As such, the gross receipts derived from its operation is exempted from the Value Added Tax. However, it is to be understood that the exemption applies only to the direct taxes and not to indirect taxes. The VAT, being an indirect Tax, may be passed on to the buyer of goods, properties or services, by the seller thereof (Sec. 99, NIRC as amended). Accordingly, there is nothing to preclude the television/radio stations from including the VAT in the billings for services rendered thereby. This practice is not violative of the above provision and the same not being covered by the exemption, rather, and as a consequence thereof, it is to be considered as part of the cost of service purchased. 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, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue