VAT Ruling No. 005-06

April 28, 2006 VAT RULING NO. 005-06 Sec. 109 (J) 000-00 Mr. Darrell Tuck Director Sharemarket Institute Limited La Plaza Bldg. No. 38 President Avenue Toeville Subdivision BF Homes, Paraaque City Dear Mr. Tuck : This refers to your letter dated November 29, 2005 requesting for the issuance of a VAT Exemption Certificate to your Regional Headquarters here in the Philippines and attaching on the said request photocopies of your SEC registration, BOI Certification and BIR Certificate of Registration. Records presented showed that Sharemarket Institute Limited is a multinational company, organized and existing under the laws of Hong Kong and authorized to establish and operate a Regional Headquarters (RHQ) in the Philippines and that it was issued SEC Certificate of Registration and License No. FS200508402 dated May 20, 2005 under Book III of the Executive Order No. 226, otherwise known as the Omnibus Investments Code, as amended by R.A. No. 8756; that the firm shall limit its activities to acting as supervisory, communications and coordinating center for its affiliates, subsidiaries or branches in the region and that it shall not derive any income from sources within the Philippines and shall not participate in any manner in the management of any subsidiary or branch office its parent company might have in the Philippines. In reply, please be informed that Section 109(J) of the Tax Code of 1997, as last amended by R.A. No. 9337 provides as follows: "SEC. 109. Exempt Transactions . The following shall be exempt from the value-added tax. "xxx xxx xxx (J) Services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income from the Philippines. " In view thereof, considering that the firm's office here in the Philippines will only act as supervisory, communications and coordinating center for your affiliates, subsidiaries or branches in the region and that you do not earn or derive any income from sources within the Philippines, your request for exemption from VAT on your services rendered as a Regional Headquarters (RHQ) in the Philippines shall be exempt from VAT pursuant to Section 109(J) of the Tax Code of 1997, as last amended by R.A. No. 9337. This ruling is being issued based on the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. EDcICT Very truly yours, (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue