VAT Ruling No. 031-03

June 24, 2003 VAT RULING NO. 031-03 Section 109 (m) VAT Ruling Nos. 65-02, 49-97, 12-93 Biblical Seminary of The Philippines 177-B Karuhatan Road, Valenzuela City Attention: Joseph Shao, Ph.D. President Gentlemen : This refers to your letter dated October 23, 2002 requesting for a certification to the effect that Biblical Seminary of the Philippines (BSOP) is exempt from the payment of the value added tax (VAT). Based on the documents that you have submitted, BSOP is a non-stock, non-profit educational institution; that it is registered with BIR Revenue District Office (RDO) No. 21 as a Non-VAT taxpayer since December 19, 1989; and that on December 23, 1992 it has been granted government recognition (No. C-0059, Series of 1992) by the Department of Education, Culture and Sports (DECS) for its Graduate Course in Divinity leading to the degree of Master of Divinity (M.D.) Majors in Biblical Studies, Christian Education and Christian Studies ( changed to Pastoral Counseling effective School Year 1998-1999 per CHED indorsement dated November 10, 1999 ). In reply, please be informed that pursuant to Section 109(m) of the Tax Code of 1997, educational services rendered by private educational institutions shall be exempt from the value-added tax, provided, that they are duly accredited as such either by the DECS or by the CHED. Accordingly, the gross receipts derived by BSOP from rendering educational services are exempt from the 10% VAT. Furthermore, this exemption does not extend to BSOP's activities, other than rendering educational services (VAT Ruling No. 065-2002). BSOP cannot likewise invoke the same exemption privilege to avoid paying value added tax on its purchases of goods and services, even if intended for school operational use, because its exemption covers only takes for which it is directly liable ( VAT Ruling Nos. 47-97, 12-93 ). Thus, the 10% VAT for the supply of goods and services may be shifted or passed on to BSOP by its VAT-registered suppliers. Once shifted, the VAT will form part of the cost of BSOP. 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. EacHCD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group