Senbel Fine Chemicals Company, Inc.

June 19, 2007 BIR RULING [DA-332-07] R.R. 4-2007; RMC 62-2005 Senbel Fine Chemicals Company, Inc. 20th Floor Richville Corporate Tower 1107 Alabang-Zapote Road Madrigal Business Park Alabang, Muntinlupa City Attention: Mr. Ted Constantino SVP-Chief Financial Officer Gentlemen : This refers to your letter dated May 15, 2007 relative to the request of Senbel Fine Chemicals Company, Inc. (Senbel), for advise, on the requirements and guidelines in order for its suppliers of raw materials to issue a VAT zero-rated invoice on its purchases. It is represented that Senbel has been advised by the Tax Exempt Division, Bureau of Internal Revenue, that based on the amendment to Revenue Regulations No. 4-2007, all export oriented companies whose export sales constitute 70% of their total sales and who are accredited members of the Bureau of Export Trade Promotion are effectively VAT zero-rated; and that however, the said Revenue Regulations does not specifically require the suppliers of export oriented companies to file an application for VAT zero-rating. HIESTA In reply, please be informed that Section 5 of Revenue Regulations No. 4-2007 provides, viz: TIcEDC "Section 5. Zero-Rated Sales . Sec. 4.106-5 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-5. Zero-Rated Sales of Goods or Properties. . . . The following sales by VAT-registered persons shall be subject to zero-percent (0%) rate: (a) Export Sales. . . . (5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. aSTAcH "(Considered export sales under Executive Order No. 226" shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same . . . Moreover, Revenue Memorandum Circular No. 62-2005 provides, viz: xxx xxx xxx "A-15: A VAT registered person may issue separate invoices/receipts for the taxable, exempt, and zero-rated component of its sales provided that if the sale is exempt from value-added tax, the term "VAT-EXEMPT SALE" shall be written or printed prominently on the invoice or receipt and if the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE" shall be written or printed prominently on the invoice or receipt." HIAEaC On the basis of the foregoing and considering that Senbel is an export oriented company, its sales shall be subject to zero-percent (0%) rate pursuant to Sec. 4.106-5 of RR No. 16-2005. As such, Senbel's suppliers of raw materials may issue invoices/receipts with the term "ZERO-RATED SALE" written or printed prominently on the invoice or receipt pursuant to the aforesaid RMC No. 62-2005. IaESCH This ruling is issued on the basis of the foregoing representations. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service