VAT Ruling No. 034-88

February 23, 1988 VAT RULING NO. 034-88 102 (a)/104-000-00-034-88 Miss Sandra C. Yu c/o Atty. Eusebio Cacheco, Jr. Commercial Law Department De La Salle University Taft Avenue, Manila Dear Miss Yu : In reply to your letter dated November 10, 1987, please be informed of the following: cdta 1. Repair jobs which require the replacement of parts and some labor rendered are now subject to the 10% value-added tax in lieu of the 4% contractor's tax. 2. By virtue of P.D. 1931 as amended by E.O. 93, the tax exemption privileges of government corporations are withdrawn except those restored by the Fiscal Incentive Review Board (FIRB). In this connection, the 10% VAT can be charged by a private entity having a contract with the government corporation. Instead of the government agency withholding the VAT it is now the contractee who remits the VAT to the BIR. Moreover, the 1% withholding tax is now based on the gross contract price less the VAT. 3. In the absence of BIR Form W2, the company should be prepared to issue a company-prepared withholding tax certificate showing all kinds or types of compensation received by employees and the amount of tax withheld. 4. A part-time sales representative for merchandise is not subject to VAT. 5. The tax on the purchases from non-VAT entities cannot be used as input tax against the output taxes due from the VAT taxpayer. In case of built-in taxes (i.e., when the VAT is not separately billed), the input tax can be determined by multiplying the invoice price by 1/11. 6. The VAT return is filed quarterly for which the output and input taxes are summed up regardless of whether the transactions are sales of goods or services. 7. In case of a sale of good, the value-added tax ends with the last VAT-registered person who sells to any one not subject to value-added tax, while in case of a sale of service, it ends with the contractor or subcontractor. In both cases, the VAT is finally shifted to the end consumer or contractee. cdtech Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner