BIR Ruling No. 492-2020

BUREAU OF INTERNAL REVENUE REPUBLIC QE THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Section 109 (G) of the NIRC of BIR Ruling No.308-2017 1997, as amended. VAT-092-2020 SEP 0 8 2020

5093 P. Burgos St., Poblacion, Makati City, 4th District 1210 M.M. OPTICARE DIAGNOSTIC LAB INC.

Attention:OLIVER B.MENDIOLA

President

Gentlemen:

VAT exemption in favor of OPTICARE DIAGNOSTIC LAB INC. pursuant to Revenue Regulations No. 16-2005 as amended by Revenue Regulations No. 04-2007. This refers to your request dated November 23, 2017 for an issuance of Certificate of

Documents submitted show that OPTICARE DIAGNOSTIC LAB INC., with

existing under Philippine laws; that it is duly registered with the Securities and Exchange diagnostic facility provided that such services shall be done by duly licensed and qualified personnel. Commission (SEC) under SEC Reg. No. shown in its Articles of Incorporation, its primary purpose is to own, manage and operate Taxpayer's Identification Number (TIN) dated January 13, 2017; and that as is a corporation organized and

INC. are purely medical and laboratory services only; that it is also registered with the Clinical Microscopy, Clinical Chemistry and Serology (w/ HIV Test). Department of Health (DOH) and was issued the necessary License to Operate a Hematology, It is represented that the services being offered by OPTICARE DIAGNOSTIC LAB

of 1997, as amended, provides: In reply, please be informed that Section 109 (G) of the National Internal Revenue Code

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

XXX XXX XXX

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

XXX XXX XXX."

Ow

OPTICARE DIAGNOSTICLAB INC VAf92-Z SEP 0 8 2J20

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In relation thereto, Revenue Regulations No.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.

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

(B Exempt transaction.

XXX XXX XXX

(g Medical, dental, hospital and veterinary services, except those rendered by professionals.

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

(Emphasis ours)

XXX XXX XXX.

Based on the expressed provisions of the foregoing, it is clear that laboratory services are considered transactions exempt from VAT. Applying it to the instant case, insofar as the rendition of laboratory services by OPTICARE DIAGNOSTIC LAB INC. is concerned, this Office hereby confirms that this is considered exempt from VAT. As service provider, OPTICARE DIAGNOSTIC LAB INC. shall not pass on the VAT to its clients because said

transactions is not subject 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 as the

discovery of the source of a patient's illness or the determination of the nature of his disease

from a study of its symptoms.' The conduct of diagnostic service may either be carried out by

an employee of OPTICARE DIAGNOSTIC LAB INC. or by an independent professional

(consultants).

When conducted by the employees of OPTICARE DIAGNOSTIC LAB INC., the process of diagnosis shall form part of the medical/laboratory services and the service fee, as payment for both diagnostic and laboratory services as a package, is VAT-exempt by express provision of Section 109 (G) of the Tax Code as implemented by Revenue Regulations No. 16-2005. On the other hand, diagnostic services, when rendered by an independent

professional (consultant), shall appropriately be subject to VAT in the hands of the one who

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

OPTICARE DIAGNOSTIC LAB INC. VA -L 9 2 - 20 2 0 SEP 0 8 2020

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performs it but Opticare Diagnostic Lab Inc. cannot claim it as input tax credit. (Sec. 109(G) supra). Thus, the independent professional who conducted the diagnostic service must issue his/her own official receipts for the payment of fees therefor.

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

considered null and void.

Very truly yours,

hauaava

CAESAR R. DULAY Commissioner of Internal Revenue

036590

K-1-JAC