VAT Ruling No. 092-91

December 11, 1991 VAT RULING NO. 092-91 104 (a) (1) 000-00 092-91 Far East Bank & Trust Company Muralla, Intramuros M a n i l a Attention: Ms . Corazon M . Buenconsejo Senior Vice-President Trusts and Investments Group M a d a m : This has reference to your letter dated July 19, 1991 stating that Far East Bank & Trust Co. (FEBTC), is setting up FEB Computer Co. as a separate entity which will engage primarily in leasing computer equipment and providing computer services to the Bank, its subsidiaries and affiliates, and other companies who may wish to avail of its services; that upon incorporation, the company will register as a VAT-registered enterprise and will purchase its computer equipment and supplies from various suppliers for which it shall pay the corresponding 10% VAT (input tax); and that it will lease said computers and provide computer services to its clients for which a 10% VAT is imposed (output tax). Based on the foregoing, you now request for a ruling on whether FEB Computer Co. can charge the input tax that it pays on the purchases of computer equipment and supplies against the output tax imposed on the lease of its computer equipment and its sale of services. In reply, please be informed that input taxes generated from the purchase of goods (computer equipment and supplies) by FEB Computer Co. attributable to its business operations, are creditable against its output taxes (lease of its computer equipment and sale of services) pursuant to Section 104(a) (1) (B) to (D) of the Tax Code, as amended. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue