BIR Ruling [DA-187-98]

May 12, 1998 BIR RULING [DA-187-98] I. M. Bongar & Company, Inc. #310 Pilar Road, Almanza I Las Pias City Attention: Mr . Isaias M . Bongar President Gentlemen : This refers to your letter dated May 22, 1997 requesting for a ruling that purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory, like your company, shall be considered effectively zero-rated for VAT purposes pursuant to Section 4A(e) of Revenue Regulations No. 1-95. cdll It is represented that I. M. Bongar & Company, Inc. is a domestic corporation, 100% Filipino owned, with business address at No. 310 Pilar Road, Almanza I, Las Pias, Metro Manila; and that its products and services include the building and installation of exterior water distribution, pipe laying system, sewerage system and fire protection work. In reply, please be informed that Section 4A(e) of Revenue Regulations No. 1-95, implementing the tax incentives provisions under paragraphs (b) and (c) of Section 12, R.A. No. 7227, otherwise known as the Bases Conversion and Development Act of 1992, provides, as follows: "SEC. 4. Exemptions and Incentives . "A. All SBMA registered enterprises doing business within the Secured Area in the Zone shall enjoy the following: xxx xxx xxx "e. Purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory shall be considered effectively zero-rated for VAT purposes. However, the VAT-registered enterprises in the Customs Territory shall apply for effective zero-rating of their sales of goods and services to SBMA and to SBF enterprises pursuant to Revenue Regulations No. 5-87 as amended." Accordingly, purchases of products and services by SBMA and SBF-accredited enterprises from your company, I. M. Bongar & Company, Inc. which consists of the building and installation of exterior water distribution, pipe laying system, sewerage system and fire protection work, shall be considered effectively zero-rated for VAT purposes. Provided, however, that your company, aside from being VAT-registered, shall apply for effectively zero-rating on the sales of goods and services to SBMA and SBF enterprises in accordance with Revenue Regulations No. 5-87, as amended. (BIR Ruling No. 093-95 dated June 15, 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. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)