VAT Ruling No. 094-91

December 13, 1991 VAT RULING NO. 094-91 Nylonfoam Industrial Corporation Gregorio St., Valenzuela Bulacan Attention: Mr . Augusto Go, President Gentlemen : In reply to your letter dated August 27, 1991 please be informed of the pertinent salient features of RMO No. 14-87, viz., "encourage voluntary disclosure of undeclared inventory preparatory to the implementation of the Value Added Tax System . . . aimed at giving the taxpayers concerned a chance to adjust and correct their inventory for all tax purposes . . ."; "Pay the corresponding sales tax on the said undeclared inventory as of December 31, 1986 and June 30, 1987"; but "The amount of sales tax paid may be credited against taxpayer's future sales tax liability as allowed under existing laws." (See PAR. I & III, RMO No. 14-87) It is represented that you have duly qualified for availment of the said RMO; that you voluntarily declared your unreported inventory as of December 31, 1986 valued at P101,367.25; that you have duly paid the required 20% sales tax thereon; that you have duly recorded in your books the said previously unrecorded inventory and, likewise, recorded in your books, under your "Deferred Sales Tax Credit" account, the sales tax which you have voluntarily paid thereon amounting to P20,273.00; and, that this accordingly formed part of the balance of your Deferred Sales Tax Credit account as at December 31, 1987. Based on the foregoing considerations please be informed that the balance of your Deferred Sales Tax Credit account as at December 31, 1987, even if a portion thereof includes sales tax paid on your voluntary disclosure of unrecorded inventory pursuant to RMO No. 14-87, is legally includible as part of your transitory input tax credit, pursuant to Section 25(a)(1) of E.O. No. 273, otherwise known as the VAT Law, viz.: "Sec. 25. Transitory provisions . (a) All VAT-registered persons shall be allowed transitional input taxes which can be credited against output tax in the same manner as provided in Section 104 of the National Internal Revenue Code as follows: 1) The balance of the deferred sales tax credit account as of December 31, 1987 which are accounted for in accordance with regulations prescribed therefor; xxx xxx xxx" Very truly yours, JOSE U. ONG Commissioner of Internal Revenue