Big Luzon Trade Company

February 20, 2008 BIR RULING [DA-099-08] 108; VAT-10-2004 Big Luzon Trade Company PAMCOR Compound, Pascor Drive Sto. Nio, Paraaque City Attention: Mr. Nelson Go Manager Gentlemen : This refers to your letter dated January 4, 2008 requesting for a ruling that the sale of grocery items and other related products abroad is subject to Value Added Tax at the rate of zero percent. Documents submitted disclosed Big Luzon Trade Company (Big Luzon) is engaged in the business of trading and export of grocery items and other related products on wholesale/retail basis; that it is registered with the Securities and Exchange Commission with SEC. Reg. No. PG200716132 dated October 11, 2007; that it is likewise registered with the Department of Trade and Industry under Certificate No. 00245470 dated October 16, 2007; and that as per BIR Certificate of Registration, its line of business indicates "other retail sale in specialized stores." In reply, please be informed that Section 4.106-5 of Revenue Regulations No. 16-2005, as amended, provides viz .: SEC. 4.106-5. Zero-Rated Sales of Goods or Properties . A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of good, properties or services, related to such zero-rated sale, shall be available as tax credit or refund in accordance with these Regulations. The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: cCESTA (a) Export Sales. "Export Sales" shall mean: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" Accordingly, your export sale of groceries and other related products to foreign countries, shall be subject to VAT at the rate of zero percent (0%), it being considered a zero-rated transaction provided it complies with the other requirements such as: (a) paid for in acceptable foreign currency or its equivalent in goods and services and (b) accounted for in accordance with the rules and regulations of the BSP. Consequently, the passed on VAT (input tax) to your company by local suppliers of said groceries and other related products to be exported may be available as tax credit or refund upon the filing of the necessary application to this Bureau. (VAT Ruling No. 10-2004 dated April 16, 2004) This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed or discovered that the facts are different, then this ruling shall be without force and effect insofar as the parties herein are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service