VAT Ruling No. 004-99

January 13, 1999 VAT RULING NO. 004-99 Sec. 107 (A)-011-98-004-99 Atty. Marcial E. Lopez District Collector of Customs Port of Tacloban Tacloban City S i r : This refers to your letter dated October 12, 1998 requesting in behalf of Philippine Phosphate Corporation (Philphos), for exemption from the value-added tax (VAT) of its importation of machinery, equipment and spare parts for its exclusive use for the manufacture of sulfuric acid for export as well as ingredients or raw materials for the manufacture of fertilizer also for export. It is represented that Philphos is a government-owned and controlled corporation engaged in the manufacture of fertilizers principally for export and a duly accredited exporter of its own products and by-products continuously for more than 15 years; that on October 31, 1995, it was granted a license to establish and operate a Customs Bonded Manufacturing Warehouse (CBMW) outside customs territory; that pursuant to this license, Philphos imported in 1997 machinery, equipment and accompanying spare parts for its exclusive use for the manufacture of sulfuric acid for export as well as ingredients or raw materials for the manufacture of fertilizers likewise for export. In reply, please be informed that importations through a customs bonded manufacturing warehouse of machinery, equipment and accompanying spare parts are not subject to VAT imposed under Section 107(A) of the Tax Code of 1997. This is so because the customs bonded manufacturing warehouse is removed from the jurisdiction of the Philippine Customs Territory and, therefore, the subject importation is deemed not to have entered the Philippine Customs Territory, thus considered never introduced into Philippine Commerce. (VAT Ruling No. 011-98 dated March 4, 1998, citing BIR Ruling No. 008-96 dated January 19, 1996) Such being the case, the importation by Philphos of machineries, equipment and accompanying spare parts for its exclusive use for the manufacture of sulfuric acid for export, as well as ingredients or raw materials for the manufacture of fertilizers also for export is exempt from the 10% VAT. 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. LLpr Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group