BIR Ruling [DA-164-05]

April 14, 2005 BIR RULING [DA-164-05] 107 (A) 264-86 Arko Food Products 108 Decena Street, Arkong Bato Valenzuela City Attention: Ms. Virginia Aguilar Manager Gentlemen : This refers to your letter dated October 18, 2004 requesting for VAT exemption on return shipment of 2 pallets STC: 70 ctn. soap and lotion and 50 ctn. sweet nata de coco. It is represented that the said shipment was previously exported to Los Angeles, California, USA as evidenced by Export Declaration Nos. 91705 and 51530 and Export Bill of Lading Nos. MNLLAXO 1377 and MNLLAXO 1267; that it was returned back to the Philippines due to non-compliance on dug listing for soap items and the presence of undeclared food color not indicated in the label; and that in compliance with the Bureau of Customs requirement for VAT exemption, you now request for VAT exemption in as much as said shipment is exempt from payment of customs duties pursuant to the provisions of Section 105(t) of the Tariff and Customs Code of the Philippines. In reply, please be informed that there shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any pursuant to Section 107(A) of the Tax Code of 1997. However, due to non-compliance on dug listing for soap items and the presence of undeclared food color not indicated in the label, the goods/articles were rejected abroad and were shipped back to the Philippines. Accordingly, the return shipment of the abovementioned goods is not an importation, hence not subject to the value-added tax imposed under Section 107(A) of the Tax Code of 1997 (BIR Ruling No. 264-86 dated December 2, 1986). DACTSa 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, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group