VAT Ruling No. 034-97

April 1, 1997 VAT RULING NO. 034-97 Sec. 102; 000; 034-97 Mr. Rolando A. Galang Espina Village Surigao City S i r : This refers to your letter dated January 31, 1996 stating that you are a subscriber/planholder of College Assurance Plan (CAP), paying a monthly premium of P643.00; that the contract for this plan has been enforced already for almost five years, and has never lapsed; and that CAP started on the month of January, 1996, imposing and collecting an additional four percent (4%) to your monthly premium of P643.00 or the amount of P26.70 for the EVAT. cdLL Based on the forgoing, you now request for a ruling as to whether or not CAP can impose and collect four percent (4%) in addition to the monthly premium of P643.00. In reply, please be informed that CAP, being engaged in economic activities as a pre-need company is considered a dealer in securities subject to value-added tax on gross income under Section 102 of the National Internal Revenue Code, as amended by R.A. No. 7716. VAT is an indirect tax and the amount of tax may be passed on or sifted to the buyer of goods or services pursuant to Section 99 of the Tax Code, as amended. It may be stated in this connection, that since dealers in securities are now covered by the EVAT, they are no longer subject to the percentage tax of 4% beginning January 1, 1996. As an indirect tax, the 4% percentage tax previously imposed under Section 116 of the Tax Code on dealers in securities may likewise be passed on or shifted to customers as part of cost of goods sold or services rendered. cdt Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue