Gross Receipts which a Zone Export Enterprise Derived from Its Ship Repair Business Remain Exempt from the 10% Value-added Tax

November 9, 1987 BIR RULING NO. 354-87 103 (u) 000-00 354-87 Gentlemen : This refers to your letter dated October 12, 1987 stating that that corporation, which is 60% owned by the Philippine Government, is engaged in the ship repair business; that it is registered with the Export Processing Zone Authority (EPZA) as a zone export enterprise under Certificate of Registration No. 85-03; that as a special EPZA enterprise, PHILSECO is exempt from the contractor's tax imposed by Section 170 of the Tax Code on its gross receipts, pursuant to Section 1 of P.D. No. 1786 amending P.D. No. 66. You now request a ruling as to whether PHILSECO's gross receipt is still exempt from the 10% value-added tax imposed under Section 102 of the Tax Code as amended by Executive Order No. 273. In reply, please be informed that pursuant to Section 103(u) of the Tax Code as amended by Executive Order No. 273, and implemented by Sec. 9(b)(16) of Revenue Regulations No. 5-87 dated September 1, 1987, transactions which are exempt under special laws . . . are exempt from the value-added tax. Such being the case, the gross receipts which PHILSECO derived from its ship repair business remain exempt from the 10% value-added tax. In other words, the exemption granted to PHILSECO by P.D. No. 66 as amended by P.D. No. 1786 is not revoked by the Value-Added Tax (VAT) law. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner