VAT Ruling No. 015-97

February 21, 1997 VAT RULING NO. 015-97 Sec. 102 (b) (5); 003-96; 015-96 Scopro Optical Co., Inc. 3rd Floor, Boncraft Bldg. Mayo cor. Pinatubo Sts. Mandaluyong City, Metro Manila Attention: Mr . David Y . L . Wu President Gentlemen : This refers to your letter dated January 14, 1997 stating that you are a domestic corporation duly registered with the Board of Investments (BOI) registered with Certificate of Registration No. EP89-1238 issued on April 5, 1989 as a pioneer export producer; that your primary products are sporting rifle scopes and binoculars mainly exported to the United States; that you are operating your own Customs Bonded Warehouse (CBW # M-1385) under the supervision of Miscellaneous Manufacturing Bonded Warehouse Division Port of Manila; that your operations are likewise monitored by the Philippine National Police Firearms and Explosive Unit; that in a recent Board of Directors meeting the matter of reducing high cost of imported materials which are mainly obtained from Taiwan; that the said imported metal parts undergo anodizing, buffing, and sandblasting process depending on the customer's requirements; that lately you have found a local company engaged in metal processing which can do the abovementioned process including aluminum and treatment and anodizing; and you are now considering of importing semi-finished aluminum parts and having the local company handle the anodizing process and metal treatment. cdt Based on the foregoing representations, you now request, as a 100% exporter of the said products, for a ruling on whether or not the services to be contracted with the local company is subject to 10% value-added tax under the provisions of Executive Order No. 273 and under the provisions of Republic Act No. 7716 (otherwise known as the Expanded Value Added Tax Law) as amended by RA 8241. In reply, please be informed that pursuant to Section 102 (b)(5) of the Tax Code as amended by Republic Act Nos. 7716 and 8241 and as implemented by Revenue Regulations No. 7-95, your contracting of services will qualify for zero-rating provided that you have an approved application for zero-rating and that at least 70% of your finished products are exported (VAT ruling 3-96 dated May 14, 1996). 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, then this ruling shall be considered null and void. prLL Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant Chairman, VAT Review Committee