Industrial Galvanizers Corporation of the Philippines

April 24, 2007 VAT RULING NO. 008-07 Sec. 109, NIRC, as amended Industrial Galvanizers Corporation of the Philippines Barangay Conchu, Trece Martires City Cavite Attention: Mr. Celso L. Olmos Finance Manager Gentlemen : This refers to your application for the issuance of tax credit certificate in relation to the output tax remitted on your sales to the Samar Electric Cooperative Inc. (SAMELCO II) pursuant to Section 103 of the Republic Act (RA) No. 8241, indorsed by Mr. Ernesto Hiansen, Executive Director, One Stop Shop Duty Drawback Center, Department of Finance to this Office on November 14, 2006. It is represented that Industrial Galvanizers Corporation of the Philippines (IGCP) is a pioneer and BOI-registered company located at Trece Martires City, Cavite; that ICGP produces galvanized steel poles and supplies these, through bids, to electric cooperatives duly registered with the Cooperative Development Authority or National Electrification Administration (NEA). It is further represented that SAMECO II enjoys VAT exemption on its sales relative to the generation and distribution of electricity as well as its importation of machineries and equipment, including spare parts, which are directly used in the generation and distribution of electricity pursuant to Section 103 (s) of R.A. No. 8241. aIHCSA In reply, please be informed that the exemption under the cited Section 103 (s) of RA 8241, which does not exist anymore under the Tax Code of 1997, as amended by RA 9337, is exemption from VAT of electric cooperatives themselves on their sales relative to the generation and distribution of electricity, as well as on their importation of machineries and equipment, including spare parts, which shall be directly used in the generation and distribution of electricity. The law did not mention that the local purchases of electric cooperatives from your company shall be exempt from VAT, nor is there any law exempting their local purchases from VAT, hence your sale of galvanized steel poles and supplies to these electric cooperatives, even if they are registered with the CDA or NEA, could not be considered as exempt from VAT. In view thereof, your request for the issuance of tax credit certificate is hereby denied and could not be granted for lack of legal basis. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner