BIR Ruling [DA-411-98]

September 8, 1998 BIR RULING [DA-411-98] Value-Pro International Trader 23 Sibuyan Street, SMH Quezon City Attention: Ms . Jobina A . Lao General Manager Gentlemen : This refers to your letter dated August 27, 1998 requesting for a ruling as to whether or not the sale of goods by Value-Pro International Trader to Fujitsu Computer Products Corporation of the Philippines, a PEZA registered enterprise is effectively zero-rated under Section 106(A)(2)(c) of the Tax Code of 1997. It appears that Value-Pro International Trader is engaged in the sale of packing materials; and that Fujitsu Computer Products Corporation of the Philippines is a 100% exporter and a PEZA registered export enterprise under Certificate of Registration No. 95-35 located at Carmelray Industrial Park SEPZ. In reply, please be informed that Section 106(A)(2)(c) of the Tax Code of 1997 provides that sales to persons or entities whose exemption under special laws (e.g. duly registered and accredited enterprises of the PEZA under R.A. 7916) or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate. Such being the case, since R.A. 7916 is a special law which grants exemptions from the payment of indirect taxes to PEZA-registered business establishments operating within the ECOZONE, except payment of the preferential tax rate of 5% on gross income earned, the sales of goods by Value-Pro International Trader to Fujitsu Computer Products Corporation of the Philippines shall be effectively zero-rated. It shall be understood that the Value-Pro International Trader shall apply with the Revenue District Officer concerned having jurisdiction over its principal place of business for the effective zero-rating of its sale of goods to Fujitsu Computer Products Corporation of the Philippines pursuant to Section 4.100-2(c) in relation to Section 4.100-3 of Revenue Regulations No. 7-95, as amended. Without an approved application for zero-rating, the transactions otherwise entitled to zero-rating shall be considered exempt. (VAT Ruling No. 033-96 dated October 30, 1996) 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. cdt Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)