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Sunday, 6 March 2016
VAT official receipts and not VAT invoices should be used to substantiate VAT zero- rated sale of services to non-residents.
In taxpayer’s claim for refund of input tax related to its zero-rated sale of services to its nonresident
clients-affiliates, taxpayer presented invoices and proofs of inward remittances. The
BIR, on the other hand, argued that the sale of services to non-resident clients must be
supported by official receipts and not invoices.
The Court agreed with the BIR. According to the Court, the taxpayer, being engaged in the sale
of services in the Philippines is VATable on its gross receipts pursuant to Section 108 of the Tax
Code, thus, must be supported by VAT official receipts. Under the law, a VAT invoice is
necessary for every sale, barter or exchange of goods or properties, while VAT official receipt
properly pertains to every lease of goods or properties, and for every sale, barter or exchange of
services. Without proper VAT zero-rated official receipts, taxpayer’s reported sales of services
cannot qualify for VAT zero-rating under Section 108(B)(2) in relation to Section 113(A)(2) and
(B)(2)(c) of the Tax Code. Consequently, the input VAT allegedly attributable thereto cannot be
refunded. (Galileo Asia, LLC-Philippine Branch v. Commissioner of Internal Revenue, CTA
Case No. 8419, June 10, 2015)
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