BIR Ruling [DA-070-97]

February 14, 1997 BIR RULING [DA-070-97] Se Jong Phils. Industry Corporation Atdrman, Laguna Warehouses Corp. National Hi-way, Parian Calamba, Laguna Attention: Ms. Hyun Sook Lee General Manager Gentlemen : This refers to your letter dated October 29, 1996 requesting for a ruling that a VAT-registered corporation duly registered with the Board of Investments (BOI) as non-pioneer enterprise which failed to apply for zero rating its sale of semi-finished goods to a manufacturer-exporter is exempt from VAT. It is represented that Se Jong Phils. Industry Corporation (Se Jong) is a BOI-registered corporation organized and existing under Philippine laws since April 14, 1994; that it manufactures coil springs and other spring products which are sold to companies located at the Philippine Economic Zone in Rosario, Cavite, which exports 100% of their finished products; and that due to oversight or honest mistake committed by its accounting staff who was not aware of the need to apply for zero rating, Se Jong failed to apply for zero rating of its sales during the fiscal year 1994 up to the first quarter of 1996. In reply, please be informed that pursuant to Section 2 of the Revenue Regulations No. 2-88, sale of raw materials to an export-oriented BOI-registered enterprise whose export sales exceed seventy percent (70%) of its annual production shall be entitled to zero-rating provided that the seller has an approved application for zero-rating. Having failed top apply for zero-rating, however, the sale of coil springs and spring products by Se Jong to an Ecozone enterprises will still qualify for exemption from VAT pursuant to Section 39 of E.O. 226 in relation to Section 100 (a) (2) of the Tax Code, as amended by R.A. 7716. (VAT Ruling No. 103 (u)-031-91-031-92) 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.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)