BIR Ruling [DA-277-04]

May 17, 2004 BIR RULING [DA-277-04] Section 108 (B) (2) VAT Ruling No. 99-89 KGJS Fleet Management Manila, Inc. 6/F, Rufino Plaza Bldg., 6784 Ayala Avenue cor. V.A. Rufino St., Legaspi Village Makati City Attention: Mr. Guy Domino A. Macapayag President/General Manager Gentlemen : This refers to your letter dated August 28, 2003 requesting for a confirmation of your opinion that your company is VAT zero-rated. It is represented that KGJS Fleet Management Manila, Inc., a corporation duly organized and existing under Philippine laws, is a manning agency that provides Filipino seafarers to Kristian Gerhard Jebsen Skipsrederi, a corporation duly organized and existing under the laws of the Kingdom of Norway, with offices at Folke Bernadottesvei 38, 5033 Fyllingsdalen, Norway; that Kristian Gerhard Jebsen Skipsrederi, your Norwegian principal, owns the vessels; that your incoming remittances are in U.S. dollars; and that your organization is a non-commercial entity since your foreign principal holds legitimate shares in the company. In support of your request, you attached photocopies of the following documents: 1) Manning Agency Agreement; and 2) Application for VAT Registration dated September 9, 1994 In reply, please be informed that if you are a VAT registrant, the income you derive from your manning and crewing services rendered to vessels is automatically subject to zero-rate provided such income is paid for in foreign currency inwardly remitted in accordance with Central Bank rules and regulations pursuant to Section 108(B)(2) of the Tax Code of 1997. Thus, there is no need to seek prior approval of an application for zero-rate. However, you are still required to file a quarterly VAT return which will be used as basis for a refund of input taxes that you have paid to your suppliers of goods and services in connection with your zero-rated activity (VAT Ruling No. 99-89 dated April 13, 1989). 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group