Whether Purchases of Raw Materials, Capital Goods and Equipment and Services by the SBMA and SBF Accredited Enterprises from Enterprises in the Customs Territory shall be Considered Effectively Zero-Rated for VAT Purposes

June 15, 1995 BIR RULING NO. 093-95 R.A. 7227 000-00 093-95 Rovitron Enterprises, Inc. Ground Floor, Florama Building 3625 Bautista Street Makati, Metro Manila Attention: Ms . Victoria S . Estacio Gentlemen : This refers to your letter dated February 24, 1995 requesting for a ruling that purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory, like your company, shall be considered effectively zero-rated for VAT purposes pursuant to Section 4A(e) of Revenue Regulations No. 1-95. cdpr It is represented that Rovitron Enterprises, Inc. is a domestic corporation, 100% Filipino owned, with business address at 3625 Bautista St., Palanan, Makati, Metro Manila; that its products and services include the supply and installation of satellite video equipment and satellite dishes. In reply, please be informed that Section 4A(e) of Revenue Regulations No. 1-95, implementing the tax incentives provisions under paragraphs (b) and (c) of Section 12, R.A. 7227, otherwise known as the Bases Conversion and Development Act of 1992, provides as follows: "SEC. 4. Exemptions and Incentives . A. All SBMA registered enterprises doing business within the Secured Area in the Zone shall enjoy the following: xxx xxx xxx e. Purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory shall be considered effectively zero-rated for VAT purposes. However, the VAT registered enterprises in the Customs Territory shall apply for effective zero-rating of their sales of goods and services to SBMA and to SBF enterprises pursuant to Revenue Regulations No. 5-87, as amended." Accordingly, purchases of products and services by SBMA and SBF accredited enterprises from your company, ROVITRON, which consist of the supply and installation of satellite video equipment and satellite dishes, shall be considered effectively zero-rated for VAT purposes. Provided, however, that your company, aside from being VAT-Registered, shall apply for effective zero-rating on the sales of goods and services to SBMA and SBF enterprises in accordance with Revenue Regulations No. 5-87, as amended. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue