VAT Ruling No. 011-00

February 23, 2000 VAT RULING NO. 011-00 108 (B) (4) 083-88 011-00 New Filipino Maritime Agencies, Inc. Suite 602 L & S Building 1414 Roxas Boulevard. Manila l Attention: Mrs . Merlinda C . Velasco Chief Comptroller Gentlemen : This refers to your letter dated October 15, 1999 stating that you are the sub-agent of Litonjua Shipping, a domestic corporation, which is the principal agent of MV Maritima Songhkla, a foreign shipping company; that the said foreign principal remits payments thru Litonjua Shipping in foreign currency, which is accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); that Philippine Sinter Corporation (PSC), also a domestic corporation, is the owner of tugs/wharf being used by MV Maritima Songhkla when she discharges her cargo in Villanueva, Misamis Oriental; that PSC includes in its billing charges to Litonjua Shipping the 10% VAT for tugging, linemen handling and wharf usage services; that as sub-agent of Litonjua, you also include in your billing charges to Litonjua Shipping the corresponding 10% VAT for attendance services to MV Maritima Songhkla;. and that Lintonjua Shipping allegedly refuses to pay the 10% VAT on the ground that it merely acts as conduit of the foreign principal for whose account the said expenses were incurred. Based on the foregoing, you are requesting for a ruling as to whether or not the services rendered by PSC to MV Maritima Songhkla in the form of tugging, linemen handling and wharf usage and also your attendance services to the said foreign shipping company are subject to the 10% VAT. In reply, please be informed that pursuant to Section 108(B)(4) of the Tax Code of 1997, services rendered to vessels engaged exclusively in international shipping shall be subject to 0% VAT'. In VAT Ruling No. 083-88 dated April 14, 1988, it was ruled that storage and handling, container repair, hauling and other services rendered to foreign shipping lines which are paid for through the local shipping agents are subject to the value-added tax of 0% provided the person rendering the service is VAT-registered, the service is paid for in acceptable foreign currency and accounted for in accordance with rules and regulations of the BSP. In line with the said ruling, the services rendered by PSC to MV Maritima Songhkla in the form of tugging, linemen handling and wharf usage as well as your attendance services to the said foreign shipping company paid in foreign currency remitted to the local shipping agent (Litonjua Shipping) are subject to 0% VAT. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements set forth in this letter are not complied with, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group