BIR Ruling No. 476-2017

REPURLIC OF THE PHILIPPINES

BUREAU OFINTERNALREVENUE DEPARTMENT OF FINANCE

Quezon City

NIRC Section 109(P) Revenue Regulations No. 16-05 #476 2017 Person to Contact: Chief, Law Division Tel Nos. 926-5536/927-09-63

Date: 0ctober 12, 2017

Suite Ayala Avenue,1226 Makati City Philippines A.M.SISON.JR.&PARTNERS

Attention: Atty.Antonio L.Cardino

Gentlemen:

ruled that the sale by Coca-Cola Bottlers Philippines, Inc. Retirement Plan (the Retirement Plan in favor of the Social Security System SSSof the former's 16.72% undivided share in a parcel of land covered by Transfer Certificate of Title Ruling No.409-2015dated December 14,2015,on the portion thereof in which it was TCTNo.41276.is subject to value added tax (VAT This refers to your letter dated August 3.2016 requesting reconsideration of BIR

The pertinent portion of the aforesaid Ruling is quoted below, to wit:

subject parcel of land is subject to VAT pursuant to Section 106 entitled to exemption from income tax under Section 60(B of the other applicable taxes imposed under other provisions of the same Code. it is noted. based on the Tax Declaration No. of the 1997Tax Code,as amended. 1997 Tax Code, as amended.Hence,it may still be subject to the subject property's actual use is for commercial purpose. Accordingly the sale of the Retirement Fund to SSS of the former's 16.72% undivided share, interest and participation in the which was issued by the City Assessor of Taguig Citythat However. a retirement fund or pension trust is only

to customers or held for lease in the ordinary course of trade or business. It is also or objective which is to collect contribution from Coca-Cola Bottlers Philippines, Inc now, Coca-Cola Femsa Philippines,Inc. and its affiliates, and invest the same to fund been subjected to VAT on the basis that said property was not held primarily for sale claimed that the subject property is not being used in business or trade as the seller is not engaged in real estate business or any other businesses other than its main function the payment of benefits to employees. It is argued that the sale of the subject lot in favor of the SSS should not have

trade, an undated Certification issued by the Revenue District Office (RDO No.44. In support of the claim that the subject property is not being used in business or

Taguig/Pateros was submitted certifying that. based on the ocular inspection done by

476-2017 10-12-2017 Coca-Cola Bottlers Philippines,Inc.Retirement Plan/ Reconsideration of BIR Ruling No.409-2015 Page 2 of 3

said Office,the real property covered by TCT No nor is it used in business,as of January 27.2017. has no existing improvement.

Retirement Plan in favor of the SSS.of the former's 16.72% undivided share in a parcel of land covered by TCT No After a careful re-study of this case. this Office rules that the sale by the is not subject to VAT

Section 109(P of the 1997 Tax Code,as amended,provides,to wit

Section 109-Exempt Transactions.

l) Subject to the provisions of Subsection (2) hereof. the following transactions shall be exempt from the value- added tax.

trade or business xxx PSale of real properties not primarily held for sale to customers or held for lease in the ordinary course of

amended by RR No.04-2007,provides Relative thereto,Section 4.109-1 of Revenue Regulations (RRNo.16-05.as

SEC.4.109-1 VAT-Exempt Transactions

XXX XXX XXX.

B 4.109-2 hereof, the following transactions shall be exempt Exempt transactions. from VAT: Subject to the provisions of Sec

(p The following sales of real properties are exempt from VAT.namely

(1 customers or held for lease in the ordinary course of Sale of real properties not primarily held for sale to trade or business.

However,even if the real property is not primarily held trade or business of the seller, the sale thereof shall be for sale to customers or held for lease in the ordinary course of trade or business but the same is used in the subject to VAT being a transaction incidental to the taxpayer's main business."

Section 60B of the 1997 Tax Code,as amended,and that it may still be subject to the Retirement Fund of the subject lot in favor of the SSS is not subject to VAT for the reason that the Retirement Fund is not engaged in the real estate business and said customers or held for lease in the ordinary course of trade or business,or used in the trade or business of the seller.shall not be subject to VAT.Thus.while it is true that a retirement fund or pension trust is only entitled to exemption from income tax under other applicable taxes imposed under other provisions of the same Code, the sale by Clearly the sale of a real property,which is not held primarily for sale to

.47*017 10-12--2017

Page 3 of 3 Reconsideration of BlR Ruling No. 409-2015

property was not held primarily for sale to customers or held for lease in the ordinary course of trade or business, or used in the trade or business of the seller.

Accordingly, BIR Ruling No. 409-2015 dated December 14, 2015 is hereby modified to exempt the sale by the Retirement Plan in favor of the SsS. of the forimer's 16.72% undivided share in a parcel of land covered by TCI No. from VAT

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

Very truly yours. M

Coinmissioner of Internal Revenue CAESAR R. DULAY

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