VAT Ruling No. 003-96

May 14, 1996 VAT RULING NO. 003-96 Section 102 (B) (5)-015-92-003 Chin Su (Phil.) Company, Inc. Km. 19, Aguinaldo Highway Bacoor, Cavite 4102 Attention: Mr . Ernesto Z . Orbe Section Head-Accounting Gentlemen : This refers to your letter dated July 13, 1994 stating that you are a BOI registered enterprise with Certificate of Registration No. EP88-314 issued on April 20, 1988 as a non-pioneer export producer and a VAT-registered taxpayer with Taxpayer Identification Number (TIN) 360-000-289-550-V; that your company supplies Mei Fong Toy Philippines, Inc. and Minyin Toy Philippines, Inc. '"plastic casing parts and components" of electronic toy products; that you were registered on March 11, 1991, as toy-sub-contractor, at a capacity of 1,500,000 pieces per year for the former company, while for the latter company, you were duly registered on March 7, 1991 as toy sub-contractor, at a capacity of 650,000 pieces per year under the provisions of E.O. No. 226 as the governing law; that for the raw material requirements for your manufacture of electric toy products for Mei Fong and Minyin, the said "plastic casing parts and components" were supplied to them by their foreign buyers on "consignment" basis; and from then on, the raw materials (pellets) will be delivered to you for injection, hence, the nature of transaction is in the form of service. Based on the foregoing representations, you now request for a ruling whether or not the transaction vatable, zero-rated or exempt under the provisions of E.O. No. 273 and under the provisions of R.A. No. 7716 (Expanded Value-Added Tax Law). In reply, please be informed that pursuant to Section 102(b) (5) of the Tax Code, as amended by R.A. 7716, your sub-contracting services will qualify for effective zero-rating starting March 7, 1991 provided that you have an approved application for zero-rating and that at least 70% of the finished products of the abovementioned main contractees are exported. (VAT Ruling No. 015-92) casia Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue