Delivery by Oil Companies and Refineries of Naptha and Liquified Petroleum Gas to Manila Gas Corporation

May 4, 1988 VAT RULING NO. 130-88 102-000-00-130-88 Mrs. Nemesia Quezon Garment Sub-contractors Association (Quezon-Batangas) San Antonio, Quezon M a d a m : This refers to your letter dated February 22, 1988 requesting a ruling on the applicability of the value-added tax to your activity as garment sub-contractors of garment exporters. In reply, please be informed that if your annual gross receipts from your sub-contracting services do not exceed P200,000 and you do not register as a VAT taxpayer, you are exempt from VAT but subject to 2% tax on your gross quarterly receipts pursuant to Section 112 of the Tax Code as amended. However, if you register as a VAT taxpayer, you are subject to the 10% value-added tax even if your annual gross receipts is below P200,000 as contemplated in Section 18(d) of Revenue Regulations No. 5-87. Finally, a garment sub-contractor which is a BOI-registered entity is exempt from VAT pursuant to Section 3 of Revenue Regulations No. 2-88 if it renders subcontracting services to a BOI export producer. In this connection, you are advised to register with the Board of Investments to avail of the exemption privilege to your subcontracting services. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner