VAT Ruling No. 085-89

April 11, 1989 VAT RULING NO. 085-89 Radium Multi-Resources Corporation 21 Libertad St. Mandaluyong, Metro Manila Attention: Felino I . Maliwat Exec . Vice President S i r s : This refers to your letter dated January 18, 1989 inquiring about the correct basis of the computation of the value-added tax (VAT) applicable to the service fees received by your agency. LLjur It is represented that as a manpower placement agency, you charge your clients an 18% agency service fee on the salaries of your personnel and on which amount you also base the 10% VAT. As illustrated through a pro-forma billing: Personnel services P10,000.00 Add: 18% agency service fee (ASF) 1,800.00 Total gross receipts P11,800.00 Add: 10% VAT on (ASF) 180.00 Total collectible P11,980.00 In reply, please be informed that pursuant to Section 102 of the Tax Code, as amended by E.O. No. 273, the VAT shall be based on the total gross receipts which, in your case, is equivalent to the service fees earned by your agency plus the salaries of personnel. Thus, the correct billing is: Personnel services P10,000.00 Add: 18% agency service fee (ASF) 1,800.00 Total gross receipts P11,800.00 Add: 10% VAT on (ASF) 180.00 Total collectible P12,980.00 This finds support in VAT Ruling no. 055-89 a copy of which is hereto attached. cdti Very truly yours, JOSE U. ONG Commissioner of Internal Revenue