BIR Ruling No. 308-2017

REPUBLICOF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

by RR No. 04-2007 Sec.109 (G) of the Tax Code RR No. 16-2005, as amended of 1997: 6-14-2017 #308-2017 Tel Nos. 926-55-36/927-09-63 Person to Contact: Chief, Law & Legislative Division

Quezon City 1100 No. 94 Masikap Extension, Diliman, BEST DIAGNOSTIC CORPORATION

Attention :Dr. Antonio P. Balisi Corporate Treasurer

& Medical Director

Gentlemen:

on Best Diagnostic Corporation's exemption from Value Added Tax (VAT) pursuant to Revenue Regulations No. 16-2005 as amended by Revenue Regulations No. 04-2007. This refers to your request for an official opinion or ruling dated July 24, 2015

under Philippine laws; that it is duly registered with the Securities and Exchange conducting diagnostic and laboratory services such as but not limited to x-rays, ECG and Identification Number (TIN) Commission (SEC) under SEC Reg. No. shown in its Articles of Incorporation, its primary purpose is to engage in the business of ultrasound. Documents submitted show that Best Diagnostic Corporation, with Taxpayer's is a corporation organized and existing dated May 23, 2002; and that as

are essentially medical and laboratory services only, and does not sell pharmaceutical and medical products or drugs; that it is also registered with the Department of Health (DOH) and was issued the necessary License to Operate a Clinical Laboratory and an X. Ray Facility. It is represented that the services being offered by Best Diagnostic Corporation

In reply, please be informed that Section 109 of the Tax Code provides:

be exempt from the value-added tax: provisions of Subsection (2) hereof, the following transactions shall "SEC. 109. Exempt transactions.- (1) Subject to the

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except those rendered by professionals; G Medical, dental,hospital and veterinary services

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Best Diagnostic Corporation Page 2 of 3 #308-2017 6-14m2017

In relation thereto, Revenue Regulations 16-2005 provides:

"Section 4.109-1. VAT-Exempt Transactions.

(A) In general. - "VAT-exempt transactions" refer to the

sale of goods or properties and/or services and the use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of VAT (input tax) on purchases.

any output tax to his customers because the said transaction is not subject to VAT. The person making the exempt sale of goods, properties or services shall not bill

(B Exempt transaction.-

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g) Medical, dental,hospital and veterinary services. exceptthose rendered by professionals.

or drug store, the sale of drugs and medicine is subject to VAT. (Emphasis ours) Laboratory services are exempted. If the hospital or clinic operates a pharmacy

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insofar as the rendition of laboratory services by Best Diagnostic Corporation are services are considered transactions exempt from VAT. Applying it to the instant case Based on the expressed provisions of the foregoing, it is clear that laboratory

concerned, this Office hereby confirms that these are considered exempt from VAT. As service provider, Best Diagnostic Corporation shall not pass on the VAT to its clients because said transactions are not subiect to VAT.

However, in relation to the conduct of diagnostic services, whether such is also exempt from VAT shall depend on how it is provided.The process of diagnosis is defined

his disease from a study of its symptoms.' The conduct of diagnostic service may either as the discovery of the source of a patient's illness or the determination of the nature of

be carried out by an employee of Best Diagnostic Corporation (the service fee is payment for both diagnostic and laboratory services as a package) or by an independent professional (consultants).

The conduct of diagnostic service when done through the employees of Best Diagnostic Corporation shall be exempt from VAT pursuant to Section 109(1) which

provides, viz.:

"SEC.109.Exempt Transactions. l Subject to the

provisions of Subsection (2) hereof, the following transactions shall

be exempt from the value-added tax

1 Definition is lifted from The Attorney's Pocket Dictionary (Law and Business Publications Inc.

Page 3 of 3 Best Diagnostic Corporation #3082017 614-2017

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employer-employee relationsh ip; ( Services rendered by individuals pursuant to an XXX XXX XXX

professional (consultant), shall appropriately be subject to VAT in the hands of the one who performs it but Best Diagnostic Corporation cannot claim it as input tax credit. (Sec. 109(G) supra) On the other hand. diagnostic services, when rendered by an independent

However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours.

Mawanryen

Commissioner of Internal Revenue CAESAR R.DULAY

K-1-JAC 007089