Bureau of Customs

July 31, 2009 VAT RULING NO. 009-09 Secs. 106 & 109 (B) Bureau of Customs Laguna Customs Office Sta. Rosa City, Laguna Attention: Mr. Hermogenes C. Caylan III Collector of Customs II, Port Collector Gentlemen : This refers to your letter dated February 17, 2009 requesting legal opinion on whether or not the local sale of Sodium Hypochlorite is subject to value added tax (VAT). ISDCaT It is represented that Sodium Hypochlorite is a chemical produced and sold locally by Universal Harvester Incorporated (UHI); that UHI is an economic zone locator at Carmelray Industrial Park II, Special Economic Zone, Calamba City, under the Philippine Economic Zone Authority (PEZA); that the raw materials used in processing of Sodium Hypochorite into finished product are purchased locally with VAT included in the purchase price; and that legal opinion is sought whether the local sale of Sodium Hypochorite is subject to VAT. In reply, please be informed that Section 106 of the Tax Code of 1997, as amended, states: "SEC. 106. Value-Added Tax on Sale of Goods or Properties. (A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value-added tax equivalent to ten percent (10%) [now 12%] of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor. (1) The term "goods" or "properties" shall mean all tangible and intangible objects which are capable of pecuniary estimation . . . ." The coverage of the imposition of VAT is so wide that it encompasses almost all transactions the object of which is capable of pecuniary estimation. The exception from the coverage of VAT as above imposed, are those specifically enumerated under Section 109 of the Tax Code. Sodium Hypochlorite is a chemical compound with the formula NaClO. Sodium hypochlorite solution, commonly known as bleach, is frequently used as a disinfectant or a bleaching agent. 1 Considering that sale of the aforementioned product is not among the transactions exempted from VAT stated under Section 109 of the Tax Code of 1997, as amended, the sale of such product, therefore, is subject to the twelve percent (12%) VAT. TEHIaD Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Footnotes 1. http://en.wikipedia.org/wiki/Sodium_hypochlorite