VAT Ruling No. 086-92

July 2, 1992 VAT RULING NO. 086-92 NIRC Sec. R.R. 5-87 Precedent Ruling 000-00 Mr. Bonifacio Santiago, CPA Room 312 Don Santiago Bldg. 1344 Taft Avenue Ermita, Manila S i r s : This is with reference to your letter dated March 4, 1991 requesting for a ruling regarding the accounting treatment of input tax attributable to VAT exempt sales. In reply, please be informed that Revenue Regulations 5-87 states that if a VAT-registered person is also engaged in other activities, the input taxes paid for purchases of goods and services which cannot be directly attributed to either operation shall be allocated between the VAT taxable operation and the other exempt operation based on their respective sales. The input tax attributable to VAT taxable operations is creditable against the output tax liability; while the input tax corresponding to the VAT exempt activity should be charged to operation as additional cost/expense in the acquisition of the goods and/or services purchased. HCTDIS Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue