VAT Ruling No. 079-01

October 29, 2001 VAT RULING NO. 079-01 Sec. 5 VAT Ruling 058-2000 Philippine Stock Exchange, Inc. Phil. Stock Exchange Centre Exchange Road, Ortigas Center Pasig City Attention: Mr. Ramon T. Garcia President Gentlemen : This refers to your letter dated 30 January 2001 concerning your request for a reconsideration of VAT RULING NO. 058-2000 dated 13 December 2000 that Brokers, including "Stockbrokers," became subject to the 7% Gross Receipts Tax, in lieu of the 10% value-added tax, for the period from 01 January to 31 December 2000, and that beginning 01 January 2001, the said Brokers shall again be liable to the 10% VAT, in lieu of the said 7% Gross Receipts Tax, pursuant to R.A. No. 8761. It is your position that Stockbrokers may not be embraced under the said law, hence, they remained subject to the 10% VAT on their sales of services. In reply, please be informed that Section 5 of R.A. No. 8761 provides: "SEC. 5. Transitory Provisions . Effectivity of the Imposition of the value-added tax on the following services shall take effect on January 1, 2001: "(c) Services rendered by Stock , real estate, commercial, customs and immigration brokers: Provided, That for the year beginning January 1 up to December 31, 2000, the aforementioned brokers shall, in lieu of the value-added tax prescribed under Title IV of the National Internal Revenue Code of 1997, be subject to a tax equivalent to seven percent (7%) based on gross receipts from brokering services which shall be paid in the manner and in accordance with the provisions of Title V of the said Code: Provided, further, That beginning January 1, 2001, the aforementioned brokers shall be subject to the value-added tax, in lieu of the seven percent (7%) tax. "xxx xxx xxx." It is clear from the above quoted provision of law that Stockbrokers became liable to the 7% Gross receipts tax, in lieu of the 10% VAT, for the period from 01 January to 31 December 2000. Hence, the said law may not be interpreted otherwise. Thus, the Court held in the case of MUOZ & CO., plaintiffs-appellees, vs. JOHN S. HORD: 1 "The internal-revenue laws can not be so construed as to extend their meaning beyond the clear import of the words used. It is the duty of the courts of the Union, undoubtedly, so far as they are invested with any agency in carrying out the financial purposes of the Government, fairly to enforce the revenue laws of the country, and see that they are not fraudulently evaded, but they are not at liberty, by construction or legal fiction, to enlarge their scope to include subjects of taxation not within the terms of the law." In view thereof, this Office regrets to inform that your request for the reconsideration of VAT RULING No. 058-2000 cannot be granted for lack of legal basis. Very truly yours, (SGD.) RENE G. BAEZ Commissioner of Internal Revenue 1. [G.R. No. 4832. January 28, 1909.] MUOZ & CO., plaintiffs-appellees, vs. JOHN S. HORD, Collector of Internal Revenue, defendant-appellant.