VAT Ruling No. 058-00

December 13, 2000 VAT RULING NO. 058-00 R.A. 8761 000-00 Philippine Stock Exchange, Inc. PSE Centre, Exchange Road Ortigas Center, Pasig City Attention: Mr . Ramon T . Garcia President Gentlemen : This refers to your letter dated May 11, 2000 addressed to the Secretary of Finance, which in effect seeks, in behalf of your member-brokers, exemption from the coverage of RA 8761 (Gross Receipts Tax on Stockbrokers) which was approved on 15 February 2000, imposing the following tax on certain services, including stockbrokers: (1) a 7% tax on gross receipts from brokering services for the year beginning January 1 to December 31, 2000, and (2) 10% VAT effective January 1, 2001. It is represented that the above law on the amendment to the VAT law came as a surprise to your brokers as they are already in the VAT mode; that you fail to understand the rationale in including the stockbrokers in the transitory provision of the law, only to revert to the VAT mode come year 2001; that it is your position that there appears to be a mistake somewhere in including our stockbrokers in the transition as the ultimate intention of the law is to put everybody in the VAT mode come year 2001; that for several stated reasons, you would now like to seek the exemption of the stockbrokers from the implementing rules and regulations to be issued for the implementation of Republic Act 8761. In reply, please be advised that this Office is merely the implementor of revenue laws as written and would not be the proper venue to address matters directed at the wisdom of the law. R.A. 8761 is a valid law and we cannot deviate from its clear and express language. Such being the case, we can only reiterate that stockbrokers, among others, are subject to the 7% tax on gross receipts from brokering services for the year beginning January 1 to December 31, 2000, and to the 10% VAT effective January 1, 2001. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue