VAT Ruling No. 069-90

March 23, 1990 VAT RULING NO. 069-90 AP Canlas & Associates. Inc. 103 Kalayaan Avenue, Diliman, Quezon City 3rd Floor, Vargas Building Attention: Godofredo C . Bala S i r s : This is in connection with your letter dated October 4, 1989, wherein you represented that the labor component of your masonry works as contractor for the construction of a multi-storey building will be supplied by your sub-contractor. In this connection, you seek clarifications on: a) Who shall be liable for the payment of the Value Added Tax (VAT) in a contract between a contractor and a sub-contractor, b) In the event of a joint responsibility, what is the appropriate sharing of the due amount between the contractor and a sub-contractor. In reply, please be informed that a contractor and a subcontractor assume no joint responsibility in the payment of the VAT, because both parties are liable to the payment of the VAT on the total gross receipts received by each party in consideration for their respective contracts. It is to be emphasized, however that the value-added tax payable by the sub-contractor can be passed on to the contractor who, in turn, can claim the same as input tax credit against his own value-added tax payable (output tax). Please be guided accordingly. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue