VAT Ruling No. 069-01

October 11, 2001 VAT RULING NO. 069-01 Sec. 109 (e), R.R. 7-95 BIR 474-88, 094-95 Mr. Daniel N. Pe Proprietor DP Motorist Center Cainta, Rizal S i r : This refers to your letter dated May 15, 2001 requesting for a ruling or opinion on the applicable business tax, value added tax or percentage tax, on your sale of petroleum products and other items in connection with your operation of a gasoline station. This query stemmed from your application for approval to print invoices where the staff of Revenue District No. 46, Cainta, Rizal, allegedly advised you that even if you are exempt from VAT, you are not exempted from paying the corresponding percentage taxes and this should have been made from the start of your operations. You mentioned in your letter that you are a VAT-registered person. In reply, please be informed that pursuant to Section 109 (e) of the Tax Code of 1997, the " sale or importation of . . . petroleum products (except lubricating oil, processed gas, grease, wax and petrolatum) subject to excise tax imposed under Title IV" is exempt from the VAT (BIR Ruling No. 094-95). Accordingly, your sale of gasoline, diesel, kerosene, liquified petroleum gas (BIR Ruling No. 474-88) and other petroleum products subject to excise tax, except lubricating oil, processed gas, grease wax and petrolatum, is exempt from the VAT. Your sales of the said VAT-exempt petroleum products are likewise exempt from the 3% percentage tax prescribed under Section 116 of the said Code since this percentage tax only applies to sale of goods, property or services which are otherwise subject to 10% VAT but, however, the taxpayer opted to avail of the percentage tax in lieu of the VAT, pursuant to Section 109 (z) of the said Code. Section 116, in relation to Section 109 (z) of the Code, is not applicable to VAT exempt sales under Section 109 (a) to (y) of the Code, hence, does not apply to sales of the said petroleum products because the same are VAT exempt under Section 109 (e) of the Code. On the other hand, your sale of tires, batteries, accessories and other goods, including lubricating oils, processed gas, grease, wax and petrolatum are subject to VAT pursuant to Section 106 of the Tax Code of 1997. Finally, your sale of services such as car repairs, repainting, overhauling, vulcanizing, etc. is subject to VAT under Section 108 of the same Tax Code. Such being the case, this Office finds no legal basis to the alleged contention of Revenue District Office No. 46 that your VAT exempt transactions are, however, subject to percentage tax. Incidentally, please be advised that as a VAT-registered operator of a gasoline station, you are required to issue NON-VAT sales invoices for your sale of VAT-exempt petroleum products, VAT sales invoices for sale of goods subject to VAT and VAT official receipts for your sale of taxable services pursuant to Revenue Regulations No. 7-95, as amended. This ruling is being issued based on the facts as represented. However, if it will be disclosed in an investigation that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group