Taxability of Chromeplating Services Using Own Stock of Imported Chemicals Later on Subject to Liquidation

June 2, 1994 BIR RULING NO. 110-94 102 000-00 110-94 Chin Su (Phil.) Company, Inc. Km. 19, Aguinaldo Highway Bacoor, Cavite Attention: Mr . Ernesto Z . Orbe Accounting Head Gentlemen : This refers to your letter dated December 7, 1993 stating that your company, a BOI-registered enterprises, is the supplier of plastic casing parts and components of electronics communication equipment to Sharp (Phils.) Corporation and Matsushita Communication Industrial Corporation of the Philippines; that the electronics telecommunication equipment produced by both companies are exported; that the said companies supply to you the raw materials, i.e., pellet, resins and mold; that you undertake the process of injection molding in your injection molding machines; that aside from the injection molding process, your company also provides to the same companies chromeplating services to some of the plastic casing parts and components; that in the chromeplating process, the imported chemicals used are owned by your company; and that the use of the said chemicals is subject to liquidation which, in effect, make the contractee companies the purchaser and owner of the chemicals. Based on the foregoing representations, you are asking for a ruling whether chromeplating services, using your imported chemicals which are separately paid for by the concentrate and subject to liquidation, are subject to the value-added tax (VAT) or zero rated sales. In reply, please be informed that your chromeplating process for the above-named clients/customers wherein you use your own stocks of imported chemicals that are later on subject to liquidation is in effect a sale of service subject to the 10% value-added tax (VAT) pursuant to Section 102 of the Tax Code, as amended. However, only billings for the services exclusive of the cost of the chemicals shall be subject to the 10% value-added tax (VAT). Separate billings for the chemicals used by the above-named clients/customers shall be recorded as part of your VAT-taxable sales of goods. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue