VAT Ruling No. 108-89

April 22, 1989 VAT RULING NO. 108-89 SGV & Co. P.O. Box 589, Manila Attention: S.V. Salvador, Jr. Tax Division RE : NCR Corporation (Philippines) S i r s : This has reference to your letter dated May 10, 1988 requesting for a clarification on the VAT liability of leasing of printing equipment. It was represented that your client, NCR Corporation (Philippines) leases printing equipment to entities engaged in the printing business; that under Assessment Regulations No. 2-79, machineries which are "directly and essentially used to meet the needs of the particular industry" (in this case, printing) are considered as real properties; and, that under Section 103 (q) of the Tax Code, as amended by Executive Order No. 273, leasing of real property is exempted from the imposition of value-added tax. In reply, please be informed that the rental income derived from the lease of movable machineries, i.e. printing equipment, is subject to the value-added tax. Assessment Regulations No. 2-79 is pertinent only to the implementation of real property tax. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner (Officer-in-Charge)