BIR Ruling [DA-210-05]

April 27, 2005 BIR RULING [DA-210-05] Ms. Teresita S. Opea, CPA 6th Flr. Executive Bldg. Center Gil Puyat Avenue cor. Makati Avenue Makati City M a d a m : This refers to your letter dated November 17, 2004, requesting in behalf of your client, WINNER GARMENTS MFG. INC., with business address at PI JY & Sons Compound Veterans Center, Taguig, Metro Manila, an opinion on whether or not it is exempt from withholding tax. It could be ascertained from records submitted that your client is a 100% indirect exporter being a subcontractor of Winner Garments, Inc., a 100% exporter; that it has been granted a zero-rate VAT status for its sewing services for the period of January 1, 2004 to December 31, 2004 for which it was issued VAT Tax Credit Certificates; that it is your argument that should it be subjected to creditable withholding on income derived from sewing service, it will have a carry-over withholding tax every year because of the VAT TCC you obtain every year. cEDIAa In reply, please be informed that your argument holds no water. As per record, you are granted a zero-rate VAT status on your value-added tax liabilities. This zero rating, however, is not an exemption from your withholding tax liabilities. Neither are you granted under any law exemption from the same. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group