E-Way Business, Inc.

August 10, 2007 BIR RULING [DA-452-07] R.R. 16-2005 VAT-013-2003 E-Way Business, Inc. Unit 1503, 15th Floor Antel Global Corporate Center #3 Doa Julia Vargas Avenue Ortigas Center, Pasig City Attention: Ms. Mary C. Lim Corporate Secretary Gentlemen : This refers to your letter dated January 26, 2005 requesting for a ruling classifying your transactions as "Automatically Zero Rated Transaction" pursuant to Section 108 (B) (2) of the Tax Code of 1997. It is represented that E-Way Business, Inc. (E-Way) is a newly established company offering Contact Center/Call Center, Business Process Outsourcing and other allied services (including but not limited to data and information processing and providing telephone, facsimile and e-mail based services); that its clients are non-resident foreign business entities whom it will bill and be paid in BSP-Acceptable foreign currency, such as USD, AUD, NZD; that it is registered with the Securities and Exchange Commission under Registration No. CS200412392 dated August 13, 2004; and that its primary purpose is to engage in the business of data and information processing and providing telephone, facsimile and E-mail-based services to clients/customers. In reply, please be informed that Section 4.108-5 (a) & (b) (2) of Revenue Regulations No. 16-2005 dated September 1, 2005, provides, viz: "SEC. 4.108-5. Zero-Rated Sale of Services . (a) In general. A zero-rated sale of service (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of goods, properties or services, related to such zero-rated sale, shall be available as tax credit or refund in accordance with these Regulations. EATCcI (b) Transactions Subject to Zero Percent (0%) VAT Rate. The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate: HaIATC xxx xxx xxx (2) Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration of which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP." Since, E-Way's sale of services is governed by Section 108 (B) (2) of the NIRC of 1997, as implemented by Section 4.108 (a) & (b) (2) of Revenue Regulations No. 16-2005, the same is entitled to the benefit of the zero percent (0%) VAT in accordance with the above cited law and regulations. Thus, the sale of services by E-Way shall be considered export and subject to zero percent (0%) VAT. The vendor shall not impute or shift any VAT as part of the cost to be paid by E-Way on its purchases. (BIR Ruling No. 013-2003 dated January 20, 2003) 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. TAaCED Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service