VAT Ruling No. 040-91

May 29, 1991 VAT RULING NO. 040-91 Kalinisan Laundry Group Manggahan Street, Bagumbayan Quezon City Attention: Mr . Ariel dela Cruz AVP, Institutional Laundry Division S i r : This refers to your letter dated November 20, 1990 stating that for laundry services rendered, your company billed Ospital ng Maynila the contracted fee together with the 10% VAT. Nonetheless, Ospital ng Maynila paid only the contracted fee (VAT not included) contending that it is not subject to VAT. In this connection, you seek clarification on the following: a) Whether or not Ospital ng Maynila is VAT-exempt b) Whether or not the VAT paid by Kalinisan Laundry Group for its sale of services can be passed on to Ospital ng Maynila, a customer of the former. In reply, please be informed that for hospital and medical services rendered, Ospital ng Maynila is not subject to VAT pursuant to Section 103(l) of the Tax Code. The exemption however, applies only to taxes for which it is directly liable and does not apply to taxes which are being passed on to it by its suppliers. Consequently, as regards purchases of goods and services, the VAT thereon paid by the supplier can be passed on to Ospital ng Maynila and ultimately be considered as added cost of the goods and services procured for the VAT at this stage is merely an indirect tax. cdtech Very truly yours, JOSE U. ONG Commissioner of Internal Revenue