VAT Ruling No. 073-97

December 15, 1997 VAT RULING NO. 073-97 Sec. 108; 000; 073-97 World Best Manufacturing Corporation 116 Camia St. Ayala Alabang Village Alabang Muntinlupa Attention: Ms . Liwayway F . Sanchez Accountant Gentlemen : This has reference to your letter dated May 25, 1997 posing the following queries: LLjur 1. How can World Best Manufacturing Corp. claim tax refund/credit for the VAT/input tax passed on by TECHNOLOGY AND LIVELIHOOD RESOURCE CENTER, a government corporation engaged in the business of leasing government properties, including the property leased to the former, when the latter is issuing the Official Receipt of the Republic of the Philippines and not a VAT invoice or VAT Official Receipt? 2. Should the 5% expanded withholding tax be withheld on the rental payment to TECHNOLOGY AND LIVELIHOOD RESOURCE CENTER? If so, what is the basis of the withholding tax? In reply thereto, please be informed as follows: 1. Before a taxpayer can avail of tax credit/tax refund of the VAT/Input Tax on its purchases, it must prove to the Bureau of Internal Revenue that these purchases are taxable transactions and are duly supported by VAT Invoices/Receipts. Thus, if World Best Manufacturing Corp. would want to claim VAT credit and/or refund of the Input Tax on its rental payment to the Technology and Livelihood Resource Center, it should demand VAT Invoice/Receipt prescribed under Section 4.108.1 of Revenue Regulations No. 7-95 for every rental payment to the latter. 2. World Best Manufacturing Corporation should withhold the 5% expanded withholding tax on the rental payment to TECHNOLOGY AND LIVELIHOOD RESOURCE CENTER based on gross rental payment, excluding the passed on VAT. LLjur Please be guided accordingly. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue