VAT Ruling No. 002-91

January 28, 1991 VAT RULING NO. 002-91 Section 100-000-002 Philippine Aerospace Development Corp. Domestic Airport Road Pasay City Attention: Mr . Rodolfo S . Avalde Controller S i r s : This refers to your letter dated October 3, 1989, seeking clarification as to who shall be liable for the payment of the value-added tax (VAT) on the airport maintenance and hangarage services your company renders to Ten Knots (Phils.). As represented, the 10% VAT is included in your sales invoice issued to Ten Knots Phils. in accordance with the service contract; that payments for services rendered are in local currency; and that Ten Knots (Phils.) however, ignores payment of the VAT on the basis of VAT Ruling No. 118-89 which grants said entity zero-rating on their sale of scuba diving services, the consideration of which was paid in acceptable foreign currency. In reply, please be informed that pursuant to VAT Ruling No. 118-89, only the scuba diving services paid for in acceptable foreign currency inwardly remitted and duly accounted for in accordance with Central Bank regulations (Section 102(a)(1) of the Tax code, as amended.) rendered by Tan Knots are subject to VAT at zero-rate. Thus, maintenance and hangarage services rendered to them are subject to VAT at 10% pursuant to Section 102(a) of the same Code, payable by you as the seller but can be shifted to Ten Knots, being the end user. In sum, it is the export sales and services of Ten Knots, paid in foreign currency, that are entitled to zero-rating and such should not be confused to include exemption from payment of the value-added tax on its purchases of goods and/or services. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue