VAT Ruling No. 031-98

October 29, 1998 VAT RULING NO. 031-98 Sec. 108-000-031-98 Mr. Ronaldo A. Litiatco Ventures Unlimited, Inc. 3/F Equitable Bank Building U.N. Avenue corner J. Bocobo St. Ermita, Manila S i r : This refers to your letter dated June 22, 1998 which was referred to us by Director Candon B. Guerrero of the Bangko Sentral ng Pilipinas requesting for our opinion on the "practices of Lending Investors," as well as "the laws and regulations that allow or prohibit the passing on or charging of the EVAT and Gross Receipts Tax to the borrower". In reply, please be informed that lending investors are now subject to the value-added tax (VAT) pursuant to Section 108 of the Tax Code of 1997 (then Sec. 102 of the Tax Code of 1977, as amended, and as implemented by Rev. Regs. No. 7-95, otherwise known as the "Consolidated VAT Regulations", as amended by Rev. Regs. No. 6-97) because VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. This rule shall likewise apply to existing contracts of sale or lease of goods, properties or services pursuant to R.A. No. 7716 effective January 1, 1996. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group