Logicall, Inc.

January 16, 2009 VAT RULING NO. 001-09 Sec. 108 (B); VAT Ruling 006-2006 Logicall, Inc. 1133 Metropolitan Avenue cor. C. Roces Avenue Makati City Attention: Ms. Belinda A. Co Finance Director Gentlemen : This refers to your letter dated March 20, 2006 stating that your company is a newly organized domestic corporation initially providing call center and telemarketing services for its US-based clients; that it is likewise a BOI-registered enterprise on a Pioneer Status under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987; and that as such, it is paid in US dollars which are accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) pursuant to Section 108 (B) (2) of the Tax Code of 1997, as amended. aHESCT In connection therewith, you now request for a ruling that your services rendered to US-based foreign clients and are paid for in foreign currency is subject to VAT at zero-rate. In reply thereto, please be informed that Section 108-5 (b) (2) of Revenue Regulations No. 16-2005, as amended by Revenue Regulations No. 4-2007, provides that "Sec. 4.108-5. Zero-Rated Sale of Services. xxx xxx xxx (b) Transactions Subject to Zero Percent (0%) VAT Rate. The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate: xxx xxx xxx (2) Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP; xxx xxx xxx" The rationale of the above-mentioned provision has been enunciated by this Office in BIR VAT Ruling No. 006-06 dated May 30, 2006, that ". . . the foregoing precepts laid down by the said rulings (VAT Ruling Nos. 010-01 dated March 8, 2001 and 025-01 dated May 17, 2001), this Office hereby confirms your opinion that E-Way's sale of services is considered automatically zero-rated, it being not one of the effectively zero-rated transactions enumerated under Section 4-102(c) of Revenue Regulations No. 7-95, and therefore, there is no need to file an application for zero-rate and the status of E-Way as a zero-rated VAT taxpayer commenced from the effectivity of its VAT registration." SUCH BEING THE CASE, this Office holds that the services (call center) rendered by your company to your US-based foreign clients and are paid for in foreign currency are considered automatically zero-rated. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. CHATcE Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner