VAT Ruling No. 109-88

April 25, 1988 VAT RULING NO. 109-88 100-000-00-109-88 Ace Foods, Inc. Makati Central P.O. Box 1066, Makati Metro Manila Attention: Mr . J . L . Enriquez Vice-President Gentlemen : This refers to your letter dated February 19, 1988 stating that you are a distributor of various supermarket items; and that it has been your trade practice to give free goods to customers in order to promote sales efforts. You now request information as to whether the free goods given on account of sale are subject to VAT. In reply, please be informed that the value-added tax imposed under Section 100 of the Tax Code as amended, by Executive Order No. 273 is based on the gross selling price of the goods sold. The goods given free in the course of trade or business is not considered transaction deemed sale. Thus, in your illustrative example, the 10% value added tax is based only on the P1,000.00 which is the price of the cases of catsup. Very truly yours, BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue By: VICTOR A. DEOFERIO, JR. Deputy Commissioner