VAT Ruling No. 064-89

March 17, 1989 VAT RULING NO. 064-89 Hapi Film Productions, Inc. Ground Floor Manila Memorial Park Bldg. 2283 Pasong Tamo Extension Makati, Metro Manila Attention: Monica S . P . Villonco President S i r s : This refers to your letter dated January 20, 1989 inquiring about the proper basis of the 10% value-added tax (VAT) on your billings to a TV station wherein you are producing taped TV shows. In reply, please be informed that pursuant to Section 2(m) of Revenue Regulations No. 5-89 the VAT shall be based on the total gross receipts, which enter to the total amount of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied with the services and deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding the VAT. In your case, gross receipts shall include all expenses for props, costume, taping materials, technical requirements and all other costs inherent in the completion of the taped materials for exhibition, including professional fees for producers, talents and TV station staff and crew to be used in the production. Hence, the gross receipts consist of the lump sum price net of the franchise tax and expanded withholding tax. In billing your customer for the consideration received, your company may or may not indicate the VAT separately in your invoice. If the tax is billed as a separate item in the invoice, the tax shall be based on the gross receipts, excluding the VAT. On the other hand, if the tax is not billed separately, the tax shall be determined by multiplying the gross receipts (including the amount intended to cover the tax) by 1/11. LLpr Please be guided accordingly Very truly yours, VICTOR A. DEOFERIO, JR. Deputy-Commissioner