VAT Ruling No. 043-91

May 29, 1991 VAT RULING NO. 043-91 Rev. Fr. Roberto C. Canlas Mary, Mother of Good Counsel Parish Marcelo Green Village Paraaque, Metro Manila Rev. Fr. Canlas : This has reference to your letter dated November 28, 1990 stating that Mary, Mother of Good Counsel Parish which is composed of 70,000 parishioners majority of which come from the depressed area, has embarked on a P3.5 million fund-arising project to finance the construction of a 3-storey parish center that would serve as offices, meeting place, activity center, auxiliary chapel and venue for other parish-related types of services that can be housed by the structure; and that in line with the fund-raising project, you have organized a fund drive called "Bongga Ripa sa Parokya" with a brand new 1991 Mitsubishi Lancer as its major prize. In this regard, you now request exemption from payment of the 10% Value-Added Tax (VAT) and withholding tax on the purchase and awarding as a prize of said car, respectively. In reply thereto, we regret to inform you that your request cannot be granted due to lack of legal basis. In accordance with Section 149 of the Tax Code, as amended, your purchase of a brand new car shall be subject to the Ad Valorem tax based on the manufacturers selling price net of excise and Value-Added Tax. Furthermore, under Section 99 of the same Code, the Value-Added Tax is imposed on the person who sells goods, renders services or imports goods. Since VAT is an indirect tax, the seller can pass on the VAT to the buyer. In your particular case, as buyer of the car, you will have to pay the VAT as part of additional cost of the goods you acquire. On the other hand, when the car shall be given as a prize, it shall be subject to withholding or final tax of twenty percent (20%) pursuant to Section 21(c)(1) of the same Code, which tax shall be withheld and remitted by your parish. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue