VAT Ruling No. 010-03

January 10, 2003 VAT RULING NO. 010-03 RMO 9-2000 003-2002 040-2002 De Guzman & Celis Law Office Suite C, 15th Floor, Strata Building Emerald Avenue, Ortigas Center Pasig City Attention: Atty. Francisco G. De Guzman Counsel S i r : This refers to your letter dated August 13, 2002, requesting for a ruling, in behalf of your client, Philex Mining Corporation (Philex) , which is a Value-Added Tax (VAT) registered and Board of Investments (BOI)-registered producer whose products are 100% exported, on the VAT treatment of its importation of equipment, materials and supplies, which are for the exclusive use of the company for its mining operations, in connection with Revenue Memorandum Order No. 9-2000. cCAIES It is represented that Philex is engaged in the mining industry; that its afore-stated importation of equipment, materials and supplies used exclusively for the production of copper, gold and silver, which are 100% exported, cannot be released by the Bureau of Customs without the payment of the customs duties and VAT; and that, accordingly, it still has to file a claim for credit or refund of the said VAT payments. It is likewise argued that the situation of Philex is exactly the same as that of Philippine Economic Zone Authority (PEZA)-registered enterprises, which are accorded automatic zero-rated VAT treatment on its purchases of goods, property and services pursuant to Revenue Memorandum Circular No. 74-99. In reply, please be informed that, as stated in our VAT Review Committee Ruling No. 040-2002, which incidentally was addressed to Philex, RMO No. 9-2000 does not in any way grant new tax incentives or exemptions. It simply aims to relieve BOI-registered manufacturers/producers (whose products are 100% exported) that are VAT-registered, from the tedious processes of either prior approval of the application for effectively zero-rated VAT as mandated by Section 4.107-1(d) of Revenue Regulations No. 7-95, or claiming tax refunds or credits of input taxes under Sec. 112 of the Tax Code of 1997, regarding their purchases of goods, properties or services from VAT-registered suppliers , by according them automatic zero-rated VAT treatment. However, as stated in our VAT Review Committee Ruling No. 003-2002, to avail of the benefits of RMO 9-2000, one of the conditions is that the supplier must be VAT-registered. Accordingly, your importation of equipment, materials and supplies, even if they will be used exclusively for the production of copper, gold and silver, which are 100% exported, cannot be accorded automatic zero-rated VAT treatment under RMO 9-2000 because the supplier, which is from abroad, is presumably not VAT-registered. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group