BIR Ruling [DA-060-06]

February 24, 2006 BIR RULING [DA-060-06] R.A. 9337; RR 16-2005; VAT Ruling No. 010-2001 Havenlink Solution, Inc . 12th Floor Raffles Bldg. Emerald Ave., Ortigas, Pasig City Attention: Mr. Paul C. Ibasco President Gentlemen : This refers to your letter dated January 3, 2006 requesting for confirmation of your opinion that the sale of services of your company, HAVENLINK SOLUTION, INC. is entitled to the benefit of the zero percent value-added tax (VAT). It is represented that Havenlink Solution, Inc. with TIN 242-386-051-000 is duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200518722 dated November 10, 2005; that the primary purpose of the corporation is to engage in the business of providing services, including but not limited to: call center, contact centers, back office operations and data centers, the provisioning of professional services including consultation, project management and programs management, development and licensing of applications, software and contact management, and marketing solution and developing and administering of training programs for personnel required to provide the above products and services without operating a public utility; and that the services to your clients/customers in the United States, United Kingdom, Australia are paid for in U.S. dollars and remitted through the domestic banking system. In reply, please be informed that Section 6 of RA 9337, as implemented by Section 4.108.5(b)(2) of Revenue Regulations No. 16-2005, provides: "Sec. 6. Section 108 of the Tax Code, as amended, is hereby further amended to read as follows: "A. Rate and Base of Tax . . . . ." "B. Transactions Subject to Zero Percent (0%) Rate . The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0) rate: "1. . . . "2. Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." "xxx xxx xxx." Section 4.108.5(b)(2) of Revenue Regulations No. 16-2005, provides: "Sec. 4.108-5. Zero-Rated Sale of Services . "(a) . . . "(b) Transaction Subject to Zero Percent (0%) VAT Rate . The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate: "(1) . . . "(2) Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP." "xxx xxx xxx." Accordingly, your sale of the above-described information services to your foreign clients, paid for in foreign currency that is accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas, falls squarely within the purview of the above-quoted law and regulations. Hence, your opinion that the same is entitled to the benefit of the zero percent VAT is hereby confirmed. cADTSH 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service