RMC No. 31-2011: Revokes BIR Ruling [DA-(VAT-057) 552-08] dated December 18, 2008

Key points

1. What the revoked ruling held. It held that hotel services of Robinsons Land Corporation to Etihad, an international airline engaged exclusively in international air transport operations, were subject to VAT at zero percent (0%).
2. What BIR Ruling 099-2011 holds. Room accommodations and food and beverage services are rendered within the hotel’s premises and have no direct connection with transport of goods or passengers. They are not zero-rated and are subject to 12% VAT.
3. Zero-rating condition. Services to a person engaged in international air transport operations qualify for zero-rating only if they pertain or are attributable to transport of goods and passengers from a Philippine port directly to a foreign port without docking or stopping at any Philippine port.
4. Revocation. Hotel room accommodation and food and beverage services to such clients are subject to 12% VAT. The ruling and all other existing inconsistent rulings are revoked.

Who is affected

• Hotels serving clients engaged in international air transport operations