BIR Ruling [DA-153-97]

April 8, 1997 BIR RULING [DA-153-97] Balintawak Autocenter, Inc. 1240 Edsa, Balintawak Quezon City Attention: Ms. Gloria P. Victor Group Sales Manager Gentlemen : This refers to your letter dated October 4, 1995 requesting exemption from the payment of VAT relative to the purchase by Clark International Airport Corporation of two (2) units Kia Besta Vans from you. It appears that Clark International Airport Corporation is a duly registered Clark Special Economic Zone (CSEZ) enterprise with Registration Certificate No. 95-34 dated August 11, 1995. In reply thereto, please be informed that CSEZ enterprise shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under RA 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new investments laws which may hereinafter be enacted. (Sec. 5 Executive Order No. 80) Under Section 12 (c) of RA No. 7227, otherwise known as the Bases Conversion and Development Act of 1992, registered enterprises within the Secured Area of the Zone as defined in Executive Order No. 97 dated June 19, 1993, the Clark International Airport Corporation shall be liable to the payment of the preferential tax rate of 3%, plus the amounts equivalent to 1% and 1% respectively, for the Local Government Units and Special Development Fund, based on its gross income earned, in lieu of local and national internal revenue taxes. aAHTDS Moreover, under Section 100 (a) (2) (C) of the Tax Code, as amended and as implemented by Revenue Regulations No. 7-95 sales to persons or entities whose exemption under special laws, e.g. RA No. 7227, duly registered and accredited enterprises with Subic Bay Metropolitan Authority (SBMA) and Clark Development Authority (CDA), RA No. 7916, Philippine Economic Zone Authority (PEZA) effectively subject such sales to zero-rate. Considering that Clark International Airport Corporation is a CSEZ enterprise, your sale of two (2) units Kia Besta Vans to it is a zero rated sale. It shall be understood, however, that VAT registered domestic vendors shall apply for the effective zero rating of their sales to Clark International Airport Corporation and to registered enterprises within the CSEZ pursuant to Revenue Regulations No. 5-87 (VAT Ruling No. 033 dated October 30, 1996; BIR Ruling No. 046-95 dated March 3, 1995). Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)