VAT Ruling No. 045-89

January 27, 1989 VAT RULING NO. 045-89 The National Development Co. NDC Building 377 Sen. Gil J. Puyat Makati, Metro Manila Attention: Atty . Emelito C . Castro Asst . General Manager S i r s : This refers to your letter dated October 17, 1988 stating that the National Development Company in undertaking commercial, industrial, agricultural and mining ventures on which the private sector is not willing and able to undertake, invests in or extends loans and guarantees to, or enters in joint ventures with Filipino and foreign investors; that its assets which are either foreclosed or transferred to NDC by its subsidiary include, office equipment/ furniture, tugs and barges and trucks and haulers; that pursuant to the privatization policy of the government, it is required to sell some of its assets to the private sector either in the form of sale of foreclosed assets or shares of stocks and that in the latter case, privatization requires the transfer of NDC-owned assets to the subsidiary or the transfer of the subsidiary's assets to NDC. Based on the foregoing, you now request a confirmation that the sale of foreclosed and transferred assets to other parties is not subject to VAT since the transaction is not in your normal course of trade or business. LexLib In reply, please be informed that your VAT registration covers only your activity of leasing personal property and not your investment activity which is VAT exempt under Section 103(j) of the Tax Code, as amended. In other words the sale of foreclosed or transferred assets is not subject to VAT if the same were acquired for a non VAT activity for which non-VAT invoice should be issued. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue