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VAT Ruling 26-97 PDF

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178 views2 pages

VAT Ruling 26-97 PDF

Uploaded by

Arren Relucio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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April 1, 1997

VAT RULING NO. 026-97

Sec. 99; 000;026-97

San Miguel Corporation


40 San Miguel Avenue
Mandaluyong City, Metro Manila
Attention: Atty. P. Clinton L. Laudencia
Tax Lawyer

Gentlemen :

This refers to your letter dated August 14, 1996 requesting for confirmation of
your opinion that charges/billings made by your company to its subsidiaries for their
use of utilities, common facilities and services purely at cost and without any profit
and being merely reimbursements are not subject to the value added tax. cdi

It is represented that in few of your locations, two or more subsidiaries share


the same building with your company, San Miguel Corporation (SMC); that this may
be covered by lease agreement with SMC as the only nominal party-lessee; that
rentals may be paid by SMC alone to the lessor and then charged the other co-lessees
an amount equivalent to the proportionate shares of each lessee and without profit or
mark-up; that similarly various expenses such as security, building maintenance, and
utilities are first paid by the SMC to the service providers and then bills the
subsidiaries actually availing of the services the allocated expenses at cost; that the
amount charged are mere reimbursement of the expenses incurred by SMC for and in
behalf of the subsidiaries; that no profit is made nor is there any intention on the part
of SMC to make profit from the transactions.

Furthermore, it is represented that in the above transactions, SMC does not


sell, barter, exchange, nor lease any good or property neither does it render any
service to the subsidiaries.

In reply, please be informed that under Section 99 of the Tax Code as


amended, which provides for the coverage of the value added tax, only "person who

Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Second Release 2019 1
in the course of trade or business, sells, barters, exchanges, leases goods or properties
or renders services, and any person who imports goods shall be subject to the value
added tax." Accordingly, since SMC does not sell, barter, exchange, nor lease any
good or property and neither does it render any service to the subsidiaries, the above
transactions are not subject to the value added tax.

This ruling issued on the basis of facts as represented above. If it is


subsequently found out that the facts are different, this ruling shall be considered null
and void. casia

Very truly yours,

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Second Release 2019 2

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