VAT Ruling No. 021-93

April 30, 1993 VAT RULING NO. 021-93 Section 100 (A) (2)-0302-89-021-93 South Harbor Checking Co., Inc. Rm. 208 Union Cement Bldg. Bonifacio Drive, Port Area, Manila Attention: Mr . Renato G . Mendoza General Manager Gentlemen : This refers to your letter dated August 5, 1992 stating that you are a corporation duly registered with the Securities and Exchange Commission; that you provide checking and surveying services to international carriers represented in the Philippines by local ship agents; that your service fees are either paid for in acceptable foreign currency or from peso freight collection deemed foreign currency payments. In connection thereto, you now request for a ruling or certification that the service fees you earn from portions of the peso freight collections of the agents of foreign vessels and deemed inwardly remitted funds as to warrant the zero-rating of your services for the vessels of foreign principals. In reply, please be informed that pursuant to VAT Ruling No. 302-89 dated December 11, 1989, portions of peso freight collections paid by the agents of foreign vessels to those contracted to provide various services thereto while docked in Philippines ports were considered by the Central Bank to be inward remittance of foreign currency; hence, held to be zero-rated. Accordingly, while the service of checking foreign vessels for seaworthiness is not among the zero-rated services enumerated in said ruling, it is reasonably within the class of services that would qualify for zero-rating if the sources of payment for such services are peso freight collection of foreign vessels in view of the Central Bank ruling that offsetting of peso freight collection with foreign currency, intended for remittance to a foreign principal amounts to inward remittance of foreign currency. VICTOR A. DEOFERIO, JR. Commissioner of Internal Revenue Officer-in Charge