BIR Ruling [DA-004-99]

January 7, 1999 BIR RULING [DA-004-99] Commonwealth Autocenter, Inc. 43 Commonwealth Avenue Brgy. Holy Spirit Quezon City Attention: Mr . Andres L . Dy, Sr . Executive Assistant to the President Gentlemen : This refers to your letter requesting for a ruling as to whether or not the sale of locally assembled motor vehicles to Amkor Anam Advanced Packaging, a Philippine Economic Zone Authority (PEZA) registered export enterprise, is effectively zero-rated pursuant to Section 106(A)(2)(c) of the Tax Code of 1997. It is represented that you sold two (2) units of vans to Amkor Anam Advanced Packaging, a corporation established and existing by virtue of Philippine laws and with principal office address at Special Economic Zone of Laguna Technopark, Sta. Rosa, Laguna, as evidenced by vehicle Invoice Nos. 1640 and 1639, both dated October 16, 1998; that the said locally assembled motor vehicles are more particularly described as follows: One Unit 1998 Pregio GS2700cc 5 speed at equipped with Diesel Engine, Aircon & Stereo, Power Steering, Power Windows, EWD with Heater, Standard Tools and Equipment Engine No. J2-193447 Chassis No. KNHTR7313W6308552 Color: Turquoise Blue CS: 16RNX One Unit 1998 KIA HI-Besta Van 2700 Model 12 CEST equipped with Diesel Engine with Power Steering, Power Windows, Power Lock, Aircon, Stereo, EWD Complete with Standard Tools and Equipment Engine No. VN-146815 Chassis No. KNHTP7362W6224555 Color: BEET Silver CS: 87RSB to which the amounts of P56,363.64 and P40,454.55, respectively, for the two (2) units of motor vehicles were deducted as value-added tax. In reply, please be informed that Section 106(A)(2)(c) of the Tax Code of 1997 provides that sales of goods and services to persons or entities whose exemption under special laws (e.g., R.A. 7227 and R.A. 7916) or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate. Such being the case, the sale of two (2) units of motor vehicles to Amkor Anam Advanced Packaging by Commonwealth Autocenter, Inc. shall be effectively zero-rated. It shall be understood, however, that Commonwealth Autocenter, Inc. as VAT registered taxpayer shall apply with the Revenue District Officer concerned having jurisdiction over its principal place of business for the effective zero-rating of its sale of the said motor vehicles to Amkor Anam Advanced Packaging pursuant to Revenue Regulations No. 7-95. Without an approved application for zero-rating, the transactions otherwise entitled to zero-rating shall be considered exempt. (BIR Ruling No. 085-98 dated June 2, 1998) In view thereof, Commonwealth Autocenter, Inc. shall not impute or shift any VAT to Amkor Anam Advanced Packaging as part of the cost to be paid on its purchases of locally assembled motor vehicles. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. cdpr Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)