ZDC Machine Shop, Inc.

February 14, 2008 BIR RULING [DA-094-08] RMC 74-99; 046-95 ZDC Machine Shop, Inc. Main Road, Villa Olympia Subdivision San Vicente, San Pedro Laguna Attention: Mr. Carmelino A. Divino President Gentlemen : This refers to your letter dated June 7, 2007 requesting for a confirmation of your opinion that your transactions with Amertron, Inc. who operates business at Clark Special Economic Zone is a VAT-zero rated transaction and that as supplier, you can claim the benefits allowed under the law. It is represented that ZDC Machine Shop, Inc. (ZDC) is a supplier of Amertron, Inc., (Amertron) a sub lessee of Linaheim Properties, Inc.; and that Amertron, Inc. is a duly registered Clark Special Economic Zone enterprise with Certificate of Tax Exemption No. 97-21. In reply, please be informed that Section 5 of Revenue Regulations No. 4-2007, provides, viz .: "SEC. 5. Zero-Rated Sales . Sec. 4.106-5 of RR No. 16-2005 is hereby amended to read as follows: "Sec. 4.106-5. Zero-Rated Sales of Goods or Properties . . . . (a) Export Sales. . . . (5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. ACaEcH "Considered export sales under Executive Order No. 226" shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That pursuant to EO 226 and other special laws, even without actual exportation, the following shall be considered constructively exported: . . . . (2) sales to export processing zones pursuant to Republic Act (RA) Nos. 7916, as amended, 7903, 7922 and other similar export processing zones; . . . ." Thus, the sale of goods by ZDC to Amertron, a buyer located within Clark Special Economic Zone, shall be considered export and shall be subject to zero percent (0%) VAT. (BIR Ruling No. 046-95 dated March 3, 1995) 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. CAHTIS Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service