VAT Ruling No. 058-02

September 16, 2002 VAT RULING NO. 058-02 108 (A) & (C) 024-99 Nippon Housing Philippines Inc. Unit 404-405 LaO Center 1000 Pasay Road corner Makati Avenue Makati City Attention: Ms. Mylyn Salazar Accountant Gentlemen : This refers to your letter dated December 12, 2001, requesting for a ruling as to whether the employer's share for SSS, Pag-Ibig and Philhealth contributions, remitted by a VAT-registered entity engaged in providing building-cleaning services, but included in the total contract price billed to the customer, is, likewise, subject to the 10% value-added tax (VAT). In reply, please be informed that Section 108(A) of the 1997 Tax Code imposes 10% VAT on the gross receipts derived from the sale or exchange of services; the phrase "sale or exchange of services" includes those performed or rendered by service contractors. On the other hand, the term "gross receipts" means the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advanced payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding VAT. Moreover, Sec. 108(C) of the same Code provides that the tax shall be computed by multiplying the total amount indicated in the official receipt by one-eleventh (1/11). Accordingly, the employer's share for SSS, Pag-Ibig and Philhealth contributions, remitted by a VAT-registered service contractor, but included in the total contract price billed to the customer, is subject to the 10% VAT. This ruling is being issued based on the foregoing facts as represented. If, upon investigation, it will be discovered that the facts are different then this ruling shall be considered null and void. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner