VAT Ruling No. 071-90

March 23, 1990 VAT RULING NO. 071-90 Jupiter System, Inc. Room 304, Don Pablo Bldg. 114 Amorsolo Street, Makati Metro Manila Attention: Mr . Joseph G . Uy, Jr . President Gentlemen : In reply to your letter dated June 22, 1989, please be informed that the basis of computing the expanded withholding tax for services rendered by VAT-registered persons is the gross receipts exclusive of the VAT. The reason for excluding VAT from the gross receipts in determining the basis of the expanded withholding tax (EWT) is that the VAT does not form part of the income payment subject to withholding. Under Section 102 of the Tax Code, as amended, "gross receipts" means a 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 value-added tax. cdtech This finds support in BIR Ruling No. 073-89. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue