VAT Ruling No. 017-98

1998 VAT RULING NO. 017-98 Sec. 106 (A) (2) (a)-000-017-98 General Milling Corporation 6th Floor, Corinthian Plaza 121 Paseo de Roxas, Makati City Attention: Mr . Ric M . Pinca Director, Corporate Affairs Gentlemen : This refers to your May 21, 1998 letter inquiring on whether or not your proposed sale of soybean oil to Century Canning Corporation (CCC) could be considered as zero-rated VAT. prcd It is represented that General Milling Corporation (GMC) extracts the oil from soybean grains; and that CCC intends to purchase soybean oil which is a component of their production of canned tuna for the export market. In reply, please be informed that the sale by a VAT-registered person of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production is considered an export sale and subject to value-added tax at zero percent (0%) rate pursuant to Section 106(A)(2)(a)(3) of the National Internal Revenue Code of 1997. Such being the case, the sale by GMC of soybean oil, a component raw material for the production of canned tuna for export, to CCC, is considered an export sale, and therefore, subject to VAT at zero percent (0%) rate provided that CCC exports more than seventy percent (70%) of its annual production. Very truly yours. (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group