VAT Ruling No. 078-92

June 17, 1992 VAT RULING NO. 078-92 NIRC Sec. 102 (a) Precedent Ruling 164-90 DCI Data Center, Inc. 4th Floor, Executive Bldg. Center Sen. Gil J. Puyat Ave. Makati, Metro Manila Attention: Ms. Bernardita F. Ubalde Asst. Admin. & Finance Manager S i r s : This has reference to your letter dated March 23, 1992 requesting clarification if the Province of Cebu should withhold the 4% contractor's tax and the 1% expanded withholding tax from the amount payable to you for rendering computer services and related activities. In reply, please be informed that under Executive Order No. 273 effective January 1, 1988, the 4% contractor's tax has been replaced by the 10% value-added tax. Under said law, VAT cannot be subject to withholding because it is not yet determinable at the time of payment considering that there are still input taxes to be considered which are known only to the seller of service. What can be withheld is the 1% creditable expanded withholding tax on income based on the gross amount received by you, net of VAT, pursuant to Section 1(e)(2)(m) of Revenue Regulations No. 6-85. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue