May 292013
THE VAT TREATMENT of sale of motor vehicle by persons who are not in the regular business of selling cars has often been raised as an issue in tax examinations. The provision usually cited is Section 105 of the Tax Code which provides that VAT shall be imposed on any person who, in the course of trade or business sells, barters, exchanges, leases goods or properties, and renders services. The phase “in course of trade or business” is defined in the same section as “the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto.”