Taxation Law - page 7

FACTS: Respondents SM Prime Holdings, Inc. (SM Prime) and First Asia Realty Development Corporation (First Asia) are domestic corporations engaged in the business of operating cinema houses, among others. On various years, the BIR issued a Preliminary Assessment Notice (PAN) for deficiency VAT on cinema ticket sales against SM Prime (for taxable year 2000) and First Asia (for taxable years 1999, 2000, 2002 and 2003). ISSUE(S): Whether or not the gross receipts derived by operators or proprietors of cinema/theater houses from admission tickets are subject to VAT. HELD: NO. When the VAT law was implemented, it exempted persons subject to…

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FACTS: In 1998, the CIR issued a Letter of Authority authorizing the examination of respondent’s books of accounts and other accounting records regarding revenue taxes for “the period 1997 and unverified prior years.” CIR disallowed Sony’s input VAT credits that should have been realized from the latter’s advertising expense on the ground that said expense was reimbursed by Sony International Singapore (SIS) in a form of a subsidy. The disallowance resulted in a deficiency VAT assessment. ISSUE(S): Whether or not there was a sale, barter or exchange between Sony and SIS. HELD: NO. There must be a sale, barter or exchange…

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FACTS:Pursuant to a government program of privatization, the National Development Company (NDC) decided to sell to private enterprise all of its shares in its wholly-owned subsidiary, the National Marine Corporation (NMC). It decided to sell in one lot its NMC shares and five (5) of its ships. ISSUE(S):Whether or not the sale by the NDC of five (5) of its vessels to the private respondents is subject to VAT. HELD:NO. VAT is levied only on the sale, barter or exchange of goods or services by persons who engage in such activities, in the course of trade or business. “Course of…

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FACTS: In 1992, the BIR issued an assessment to private respondent for deficiency VAT for taxable year 1988. Private respondent argued that the services it rendered relating to collections, consultative and other technical assistance, including functioning as an internal auditor, were on a “no-profit, reimbursement-of-cost basis only” and that it was not profit-motivated, thus not engaged in business. ISSUE(S): Whether or not private respondent was engaged in the sale of services and thus liable to pay VAT thereon. HELD: YES. It is immaterial whether the primary purpose of a corporation indicates that it receives payments for services rendered to its…

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