VAT Ruling No. 010-92

January 27, 1992 VAT RULING NO. 010-92 NIRC Sec. 102 (a) (2) 106 (b) Precedent Ruling 032-90 Sun Hung Kai Securities (Phil.) Inc. 17th Floor, BA Lepanto Bldg., 8747 Paseo de Roxas, Makati, M.M. Attention: Mr. Edwin B. Villanueva President S i r s : This refers to your letter dated September 16, 1991 stating that Sun Hung Kai Securities (Phil.) Inc. is a stockbroker company deriving commission income from domestic and foreign non-resident clients; that the computation of the company's VAT output tax, as reflected in the quarterly VAT returns filed since January 1, 1988, is based upon the commission income earned from the aforesaid sources; and that inward remittances on foreign commission earned have all been coursed through the banking system in the Philippines. Based on the foregoing, you now request information whether the commission income received from foreign clients are considered zero-rated for VAT purposes and, therefore, entitles you to a tax credit/refund on the input taxes attributable to said sales. In reply, please be informed that commission income received from foreign clients for services rendered in the Philippines and paid for in acceptable foreign currency, inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Central Bank of the Philippines is subject to zero-rate VAT pursuant to Section 102(a)(2) of the Tax Code as amended. Persons whose sales are zero rated may, within two years after the close of the quarter when such sales were made, apply for the issuance of tax credit certificate or refund of the input taxes attributable to such sales to the extent that such input taxes have not yet been applied against output taxes. (Section 106(b) of the same Code). HDCTAc Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue