VAT Ruling No. 035-02

May 21, 2002 VAT RULING NO. 035-02 VAT Ruling No. 245-88 000-00 Commission On Audit Commonwealth Ave. Quezon City Attention: Roberto B. Catli Director IV Gentlemen : This refers to your letter dated January 23, 2002, requesting for exemption from payment of the Value-Added Tax and any other form of tax that may be imposed on your purchase of service vehicles for official use of your agency's officials and employees. In reply, please be informed that VAT is an indirect tax which can be passed on by the seller to the buyer even if the buyer is a tax exempt entity such as the government. BIR VAT-Ruling 245-88 dated June 8, 1988, states as follows: "This refers to your letter dated April 7, 1988 inquiring about the legality of the 10% Value-Added Tax (VAT) charged by the Philippine Duplicators, Inc. on its sale to the city government of Tacloban. In reply, please be informed that the 10% VAT imposed by the said company is legal even if the city government is exempt from VAT. Since the city government cannot claim for refund of the VAT charged to it, it has to absorb the VAT as part of the cost of its operation." In view of the foregoing, this office is of the opinion as it hereby holds that your request for VAT exemption on the purchase of service vehicles by your office is denied for lack of legal basis. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group