Trust Fund contributions are funds set-up by pre-need companies to be used to pay the benefits of the plan holders as provided in the pre-need plan.  It is not disputed that said Trust Fund contributions are

deducted from taxable receipts for being VAT exempt. This is clear from BIR Ruling DA-027-06, where respondent opined that pre-need plans are subject to VAT based on the gross receipts from premiums or payments received from plan holders, net of actual Trust Fund contribution.

 

Trust Fund contributions are exempted from VAT as Sec, 108 of the NIRC merely imposes VAT on the gross receipts derived from the sale or exchange of services. Trust Fund contributions are not received by petitioner as payment for its pre-need services but are received only for management by petitioner, from which the pre-need benefits of the plan holders will be obtained from.