VAT at 0% on Export Sale
BIR Ruling No. 224-89 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Nov 2, 1989
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November 2, 1989 BIR RULING NO. 224-89 100 (a); 102 (a); 150 (a) 000-00 224-89 Gentlemen : This refers to your letter dated May 9, 1989 stating that corporation has embarked on a project to establish a gold recovery plant in Pantukan, Davao del Norte to maximize the utilization of gold tailings and to assist small-scale miners in Boringot and other gold-producing communities nearby; that since you intend to operate the plant upon its completion and in order to earn revenues, you will undertake two methods, viz: (i) You will purchase tailings from small-scale miners, process and sell the end product directly to the Central Bank of the Philippines; and (ii) You will charge future customers service fee for processing gold tailings. You now request this Office to acquaint you of the type of taxes you will pay to the government. In reply, please be informed as follows: (1) Pursuant to Section 2 of Executive Order No. 581 as amended by Executive Order No. 587, the sale of gold to the Central Bank of the Philippines (CB) is considered export sale. Such being the case, the proceeds you will realize from your sale of gold tailings to the CB shall be subject to the value-added tax at 0% pursuant to Section 100(a)(1) of the Tax Code, as amended by Executive Order No. 273, if you are a VAT-registered person. If you are not VAT-registered, your sale of gold tailings to the CB is exempt from VAT pursuant to Section 103(v) of the same Code. (VAT Rulings No. 100(a-1)-000-00-057-88 dated March 8, 1988 and 103(v)-000-00-075-88 dated March 29, 1988) i (2) The service fee you will charge to future customers for the processing of their gold tailings shall be subject to 10% value-added tax under Section 102(a) of the Tax Code, as amended, because you will be engaging in the sale of services. (3) You shall also be subject to income tax on any gain that you may derive from your sale of CB of gold tailings and on your service fee for the processing of gold tailings. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner
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