VAT Ruling No. 082-90

March 29, 1990 VAT RULING NO. 082-90 Alas and Company 3rd Floor Maxi-Cool Building 2278 Pasong Tamo Extension Makati, Metro Manila Attention: Teocleta C . Belchez Tax Services Group S i r s : This has reference to your letter dated September 21, 1989 wherein you made the following representations in behalf of your client, D.M. Cera Insurance Agency, Incorporated: cdt 1) As a general sales agent, your client which receives overriding commission from Insular Life Assurance, Ltd. (principal) employs several agents who receive commission directly from the principal; 2) Your client uses all forms of the principal from application forms to premium billings and official receipts; 3) After the initial payment of the premiums the principal sends billings to clients and makes subsequent collections; 4) Your client's accounting forms are limited to checks and petty cash vouchers for disbursements only and official receipts for commission income received once a month. Based on the foregoing, you now request for a further review of VAT Ruling No. 190-89 concerning the applicability of VAT on the business operation of your client. In reply, please be informed that in spite of the aforementioned representations your client is engaged in the sale of service which is subject to 10% VAT pursuant to Section 102(a) of the Tax Code, as amended. The VAT, being an indirect tax, could be passed on to the principal (Insular Life Assurance Ltd.) and not to policy holders as emphasized in VAT Ruling No. 190-89, inasmuch as the principal is the one who pays the agency for services rendered by the latter to the former. cdta Very truly yours, JOSE U. ONG Commissioner of Internal Revenue