VAT Ruling No. 009-89

January 27, 1989 VAT RULING NO. 009-89 House of Consultants, Inc. No. 76 Butterfly Street Valle Verde VI, Pasig Metro Manila Attention: Mr . Jose J . Cardinez President & Gen . Manager S i r s : This refers to your letter dated August 1, 1989 requesting clarification as to the applicability of a zero-rating on your sale of consultancy services. cdt It is represented that as a VAT registrant at zero rated sales, your company renders consultancy services to clients who are all BOI registered enterprises exporting at least 70% of their total output and that you do not charge the 10% VAT to your exporter-clients who claim to be subject to zero rate. In reply, please be informed that: (a) Pursuant to Section 102(a)(2) of the Tax Code, as amended, your sale of consultancy services can qualify for automatic zero rating if the services rendered are paid for in acceptable foreign currency which is inwardly remitted to the Philippines in accordance with the rules and regulations of the Central Bank; (b) Pursuant to Section 2 of Revenue Regulations No. 2-88, only the sale of raw materials and not the sale of services can be effectively zero-rated subject to the condition that the sale is made to a BOI-registered enterprises exporting at least 70% of its total output. If neither one of the above conditions is present the said services are subject to the 10% VAT which can be shifted to your BOI-registered exporter-client notwithstanding the fact that they are registered for VAT purpose and are zero-rated. aisadc Very truly yours, EUFRACIO D. SANTOS Deputy Commissioner