VAT Ruling No. 011-98

March 4, 1998 VAT RULING NO. 011-98 Sec. 100 E.O. 226-008-96-011-98 Tri-Phil International, Inc. R.M. Tiosejo Compound Tunasan, Muntinlupa Metro Manila Attention: Mr . Akio Aoki President Gentlemen : This refers to your letter dated June 19, 1996 requesting confirmation of your opinion that your importation of raw materials and machine spare parts is subject to zero percent (0%) VAT. LLjur It is represented that Tri-Phil International, Inc. (TRIPHIL) is duly registered with the Board of Investments under BOI Certificate of Registration No. 87-008 dated October 8, 1987 as a preferred non-pioneer enterprise; that it is engaged in the manufacture and export of leather baseball gloves and bags under the CMT basis; and that as such it is operating a Customs Bonded Warehouse for its imported consigned raw materials and spare parts. You now request for VAT zero-rating on importation of imported raw materials and machine spare parts. In reply thereto, please be informed that the importations of machinery, equipment and spare parts which are merely consigned to a registered enterprise are not subject to the 10% VAT. Moreover, said consigned machinery, equipment and spare parts shall not be subject to the restrictions as to the period of use provided that the appropriate re-export bond is posted and that the consigned equipment shall be for the exclusive use of the registered enterprise (Article 39(c) and (f), Title III, Executive Order No. 226, as amended by Republic Act No. 7918) Customs bonded manufacturing warehouse is removed from the jurisdiction of the Philippine Customs Territory. Thus, the raw materials and/or spare parts are deemed to have entered the Philippine Customs Territory and therefore, were never introduced into Philippine commerce. Accordingly, importations through a customs bonded manufacturing warehouse of raw materials and spare parts used in the manufacturing assembly of products for export are not subject to the 10% VAT in accordance with Section 100 of the National Internal Revenue Code, as amended (now Sec. 106 of the 1997 Tax Code). [BIR Ruling No. 008-96 dated January 19, 1996] In view thereof, your importation of raw materials and spare parts under the above circumstances shall not be subject to value-added tax. However, your opinion that your importation is zero-rated cannot be confirmed for lack of legal basis. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation it is discovered that the facts are different, then this ruling shall be considered null and void. cdtech Very truly yours, SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group