VAT Ruling No. 069-92

May 26, 1992 VAT RULING NO. 069-92 102 (a); 106 (b); 000-00 Scanmar Cruise Services, Inc. G & A Building 2303 Pasong Tamo Extension Makati, Metro Manila Attention: Edgardo J. Canoza VP-Treasurer Gentlemen : This has reference to your letter dated May 28, 1991 stating that your company, Scanmar Management Services Inc. (SMSI) is a domestic corporation managing three (3) manning agencies; that pursuant to the Administrative Services Agreement executed between SMSI and the manning agencies, the former takes full control and responsibility on the administration and keeping of the latter's books of accounts; that in return for the management and services rendered; SMSI charges the agencies a fixed monthly fee per vessel to include the 10% VAT in all its billings; and that the manning agencies' will later file a claim for refund of the VAT billed by the former. Based on the foregoing, you now request exemption from payment of the 10% VAT on the services you render to said entities, retroactive to the start of your commercial operation on January 1, 1991. In reply, we regret to inform you that your request is denied for lack of legal basis. VAT being the direct liability of the seller, the one rendering the service is the person liable for payment of the VAT pursuant to Section 102 (a) of the Tax Code, as amended. There is no provision in the Tax Code which allows your services to be exempt from VAT since your clients will ultimately request for refund on the passed-on tax. Such being the case, your sale of service to the manning agencies is subject to VAT but the latter may file claim for refund or tax credit on their excess input taxes arising from zero-rated transactions within two years after the close of the quarter when such sales were made. Very truly yours, (SGD.) JOSE L. ONG Commissioner of Internal Revenue