VAT Ruling No. 055-88

March 8, 1988 VAT RULING NO. 055-88 108-000-00-055-88 Renault Tropical Automotive Corp. 2256 Pasong Tamo Makati, Metro Manila Attention: Ms . Ma . Celeste Pojas Treasurer S i r s : In reply to your request for confirmation regarding the correctness of your own implementation of the value-added tax, please be informed of the following example of invoicing. Sale of imported spare parts Tax Credit Tax Due Total Cost (inclusive tax) P110.00 Less: 10% VAT 10.00 P10.00 Cost (excluding tax) P100.00 Add mark-up(20%) of cost) 20.00 Selling Price (excluding tax) P120.00 VAT 10% 12.00 P10.00 P2.00 Selling Price to Customer P132.00 ======== It is your option if you no longer impose to your customers the 10% VAT on imported spare parts. In this case, it is presumed that the total invoice amount includes the amount intended to cover the tax. However, if you desire to impose the 10% VAT on your sale of imported spare parts to your customers when you determine the price, you should only include the P2 tax due and not the whole of P12.00 in accordance with the following example of determining the price. Importation Cost P100.00 10% VAT on importation 10.00 Mark-up 20.00 10% VAT on sale 2.00 Selling Price P132.00 ======= In determining the VAT on the sale of service, you are hereby advised to impose only 6% because prior to E.O. No. 273, the service charge already includes the 4% contractor's tax. Moreover, if you supply the spare parts in rendering the service, the payment for the spare parts shall form part of your taxable receipts. cd Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner