VAT Ruling No. 098-89

April 7, 1989 VAT RULING NO. 098-89 Seabridge (Phil.) Enterprises Room 315, 3rd Floor, L & S Bldg. 1414 Roxas Blvd., Manila Attention: Vivian T . Dabu Accountant S i r s : This refers to your letter dated November 19, December 1, 1988 and January 3, 1989 stating that your company is engaged in both trucking and brokerage business; that under your VAT Registration Certificate (No. 25-100-1569), both business services are VAT registered; and that you have issued VAT invoices and filed your VAT returns for the corresponding periods: Amount of VAT Paid Initial quarter Jan. 1-May 31, 1988 P29,780.33 Second quarter June 1-August 31, 1988 27,132.85 Third quarter Sept. 1-Nov. 30, 1988 (5,263.32) Based on the foregoing facts, you request for the following: (a) Cancellation of your VAT registration since your trucking business which is classified as a common carrier is subject to 3% and that your brokerage business from which you derive an annual gross income in the amount of less than P200,000 is not subject to VAT; (b) Amendment of your VAT return from January to November 1988 to include the input tax on your purchase of VAT taxable petroleum products like gear and lubricating oil, brake fluid and others. In reply, please be informed as follows: (a) Your trucking business is exempt from VAT pursuant to Section 103(j) of the Tax Code, as amended. For this, the cancellation of the registration of your trucking business can only be effected starting December 1, 1988 since VAT invoices have already been issued before. On the other hand, your brokerage service which is subject to VAT on the basis of you optional registration [Section 103(w) in relation to Section 107(b) of the Tax Code, as amended] can only be cancelled after lapse of two years from your date of registration pursuant Section 18 of Revenue Regulations No. 5-87. Such being the case your VAT Registration Certificate should be amended to cover on your brokerage business starting December 1, 1988 and on before each calendar quarter income from your trucking business is subject to 3% common carrier's tax. (b) The input taxes on your purchase of lubricating oil brake-fluid and VAT taxable petroleum products cannot be credited against output taxes on your VAT-registered (i.e., brokerage business) during the quarter or succeeding quarter since the said products are used in the trucking business for which no input tax is generated. cdlex Very truly yours, EUFRACIO D. SANTOS Deputy Commissioner