10% VAT Imposed on the Services Rendered by a Sawmill Operator

May 26, 1988 BIR RULING NO. 216-88 102 000-00 216-88 Gentlemen : This refers to your letter dated February 1, 1988 stating that you are a sawmill operator who is exporting sawn lumber; that since your log supply from your logging concession is not adequate to fully utilized the sawmill capacity, you plan to accept milling services for other lumber exporters; that the arrangement is that the other lumber exporters will bring and mill their own logs at your sawmill for a fee after which the lumber produced will be exported by those other lumber exporters. You now request a ruling as to whether the service fees which will be paid to you by the other lumber exporters for milling their logs for export will be subject to VAT at 10% or 0%. In reply, please be informed that the service fees which will be paid to you by the other lumber exporters for milling their lumber shall be subject to the 10% value-added tax imposed by Section 102 of the Tax Code since the services you perform do not fall among the zero-rated services enumerated in paragraph (1),(2) and (3) thereof. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner