VAT Ruling No. 011-91

February 22, 1991 VAT RULING NO. 011-91 Caltex (Philippines) Inc. Manila, Philippines P.O. Box 783 Attention: Ms . Josefina J . Poblador General Manager- Legal & Corporate Officer M a d a m : This refers to your letter dated September 25, 1990, stating that Caltex (Philippines) Inc. is exporting a refinery product called Reformate; that said product is used as a feedstock for petrochemical processing or a blending component in the manufacture of gasoline, having the following specification: cdll Specified Property Method Value Appearance ASTM D 4716 Clear and bright Color SAYBOLT + 22 minimum Aromatic, vol. % ASTM D 1319 50 min Corrosion, Copper Strip, ASTM D 130 3 hr. at 50 C 1 MAX Density at 15 C, kg/ltr ASTM D 1298 Report Distillation, C: ASTM D 86 Initial Boiling Point Report 50% Evaporated Report 90% Evaporated Report End Point 220 max Residue, vol.% 2 max Sulfur, mg/kg UOP 357 or 60 max ASTM D 1266, Annex A1 Vapor pressure, Reid, ASTM D 323 AT 37.8 C, kPa 55 max that some companies have offered to buy this same product from you to be used as solvent in the manufacture of paints, wax and other related products; that the specification of the product to be sold is identical in all respects with the product exported as Reformate except for a more stringent color specification of Saybolt 22 minimum; that this distinction is important because, as the color falls below Saybolt 22 minimum it will not meet the product specification for solvent; that both products undergo the same refinery process and both are in fact withdrawn from the same tank; and that you intend to market your products domestically. Based on the foregoing, you now pose the following: 1. If reformate is sold locally as such, i.e., to be used as feedstock for petrochemical processing or a blending component in the manufacture of gasoline, what is (are) the tax (taxes) imposable on the product? 2. If the same reformate is sold as solvent in the manufacture of paints, wax and other related products, will your ruling of September 24, 1990, confirming that this product is subject to VAT, still hold? In reply, please be informed as follows: 1. Reformate, if sold locally to be used as a feedstock for petrochemical processing, is subject to 10% VAT pursuant to Section 100(a) of the Tax Code; however, if its commercial usage is as a blending component in the manufacture of petroleum products like gasoline, kerosene, and diesel fuel oil, etc. (except lubricating oil, processed gas, grease, wax and petrolatum) subject to excise tax, it is exempt from VAT as provided under Section 103(e) of the same Code; 2. If the same reformate is sold as solvent in the manufacture of paints, wax and other related products, it is likewise subject to the 10% VAT pursuant to Section 100(a) of the Tax Code. This confirms the letter-reply of the Chief, VAT Division dated September 24, 1990 imposing VAT on the sale of the said reformate. llcd Very truly yours, JOSE U. ONG Commissioner of Internal Revenue