BIR Ruling [DA-678-06]

November 23, 2006 BIR RULING [DA-678-06] Rev. Regs. No. 16-2005; DA-307-2006 dtd. 05/10/02 Dyco 21 Phils., Inc . # 1 Andres Compound Francisco St., Maybunga Pasig City Attention: Belen T. Villondo Managing Director Gentlemen : This refers to your letter dated October 18, 2006, requesting a ruling relative to your application for VAT zero-rate on sale of goods. It could be ascertained from the documents submitted that DYCO 21 PHILS., INC. (DYCO 21, for short) is a domestic corporation, registered with the Securities and Exchange Commission on October 11, 2000, as an exporter/importer of non-ferrous metals and metal scraps and the likes, aluminum, copper, brass, zinc, etc.; that per your representation, DYCO 21 is engaged both in export and local sales; that your total sales consisted of 90% export sales and 10% local sales. In reply, please be informed that Section 4.106-5(a)(1) of Revenue Regulations No. 16-2005 dated September 1, 2005, provides, viz: "SEC. 4.106-5. Zero-Rated Sales of Goods or Properties . A zero-rated sale of goods or properties (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. The following sales by VAT-registered persons shall be subject to zero-percent (0%) rate: (a) Export Sales. "Export Sales" shall mean: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." Thus, DYCO 21's export sales corresponding to 90% of its total sales is governed by Section 106(A)(2)(a) of the Tax Code of 1997, as implemented by Section 4.106-5(a)(1) of Revenue Regulations No. 16-2005, which is entitled to the benefit of the zero percent (0%) VAT in accordance with the above-cited law and regulations. 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service