VAT Ruling No. 023-98

August 14, 1998 VAT RULING NO. 023-98 Sec. 108 (B) (3)-000-023-98 James Hardie, Inc. 4th Flr. Accelerando Building 395 Sen. Gil Puyat Avenue Makati City 1200 Attention: Lylyn Clavecillas Financial Controller M a d a m : This refers to your letter dated May 22, 1998 requesting for VAT zero-rating treatment of your sale of goods to Clark Home Depot Inc. doing business under the name and style, "Hilcres Builders' Center". It is represented that your firm is a VAT-registered entity engaged in the sale and distribution of consumer products; and that Hilcres Builders Center, with business at Clark Field, Pampanga is a duly registered Clark Special Economic Zone (CSEZ) enterprise pursuant to Republic Act No. 7227 and engaged in the business of merchandising. In reply, please be informed that Section 5 of Executive Order No. 80 provides that Clark Special Economic and Free Port Zone (CSEZ) shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under Republic Act No. 7227. Section 4 (A)(e) of Revenue Regulations No. 1-95, implementing the tax incentives provisions under Paragraph (b) and (c) of Section 12, Republic Act 7227, otherwise known as Bases Conversion Development Act, provides that "SEC. 4. Exemptions and Incentives . . . . A. All SBMA registered enterprises doing business in Secured Area in the Zone shall enjoy the following: xxx xxx xxx (e) Purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises shall be considered effectively zero-rated for VAT purposes." Such being the case, this Office holds that your sale to Clark Home Depot Inc. qualifies for VAT zero-rating pursuant to the above-quoted provisions of the law in relation to Section 108 (B)(3) of the Tax Reform Act of 1997. LexLib It shall be understood that the VAT-registered seller of goods shall apply with the Revenue District Officer concerned having jurisdiction over their principal place of business for the effective zero rating of their sales of services to Clark Special Economic Zone enterprise pursuant to Revenue Regulations No. 7-95. Without an approved application for zero-rating, the transactions otherwise entitled to zero rating shall be considered exempt. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue