Chamber of Mines of the Philippines

May 22, 2001 VAT RULING NO. 026-01 RMC 74-99 De Guzman & Celis Law Office Suite C, 15 th Floor, Strata 2000 Building Emerald Avenue, Ortigas Center 1605 Pasig City SUBJECT : Chamber of Mines of the Philippines Gentlemen : This refers to your letter dated 27 April 2001 concerning your request for a confirmation of your opinion that the sales made by the members of the Chamber of Mines of the Philippines to the (1) Bangko Sentral ng Pilipinas (BSP) and to the (2) Philippine Associated Smelting and Refining Corporation (PASAR) may qualify and be entitled to the benefit of the zero percent (0%) value-added tax (VAT), notwithstanding the provisions of Revenue Memorandum Order No. 9-2000, dated 02 February 2000, which limits the application of the zero percent VAT only to sales made by VAT-registered suppliers to BOI-registered manufacturer/producer whose products are 100% exported. It is represented that the Chamber of Mines of the Philippines is composed of various companies engaged in the mining industry; that its members are registered with the Board of Investments; that there are some members whose produce are directly exported and partially sold to the BSP and to the PASAR; and that PASAR is a PEZA-registered enterprise. In reply, please be informed as follows: 1. Since PASAR is a PEZA-registered enterprise, this case is embraced by Revenue Memorandum Circular No. 74-99. dated 15 October 1999, entitled "Tax treatment of sales of goods, property and services made by a supplier from the Customs Territory to a PEZA registered enterprise; and sale transactions made by PEZA registered enterprises within and without the ECOZONE . " Section 3 thereof provides: "SEC. 3. Tax Treatment Of Sales Made By A VAT Registered Supplier From The Customs Territory, To A PEZA Registered Enterprise . (1) If the Buyer is a PEZA registered enterprise which is subject to the 5% special tax regime, in lieu of all taxes, except real property tax, pursuant to R . A . No . 7916, as amended : (a) Sale of goods (i . e . merchandise) . This shall be treated as indirect export hence, considered subject to zero percent (0%) VAT , pursuant to Sec. 106 (A) (2) (a) (5), NIRC and Sec. 23 of R.A. No. 7916, in relation to ART. 77 (2) of the Omnibus Investments Code. (b) Sale of service . . . . . . . . . . "(2) if Buyer is a PEZA registered enterprise which is not embraced by the 5% special tax regime, hence, subject to taxes under the NIRC, e . g . , Service Establishments which are subject to taxes under the NIRC rather than the 5% special tax regime : (a) Sale of goods (i . e . , merchandise) . This shall be treated as indirect export hence, considered subject to zero percent (0%) VAT , pursuant to Sec. 106 (A)(2) (a) (5), NIRC and Sec. 23 of R.A. 7916 in relation to ART. 77 (2) of the Omnibus Investments Code. (b) Sale of Service . . . . . . . . . . "(3) . . . . . . . . . "This Circular shall serve as a sufficient basis to entitle such supplier of goods, property or services to the benefit of the zero percent (0%) VAT for sales made to the aforementioned ECOZONE enterprises and shall serve as sufficient compliance to the requirement for prior approval of zero-rating imposed by Revenue Regulations No . 7-95 effective as of the date of issuance of this Circular . " 2. RMO No. 9-2000, dated 02 February 2000, is only applicable to sales made by VAT-registered persons to "BOI-registered manufacturers-exporters with 100% export sales . " It is not applicable to this case. 3. "Sale of gold to the Bangko Sentral Ng Pilipinas (BSP)" is subject to the zero percent (0%) VAT, pursuant to Section 106 (A) (2) (4) of the National Internal Revenue Code of 1997. SaHTCE In view of the foregoing, the aforementioned members of the Chamber of Mines of the Philippines need not obtain the imprimatur of the Board of Investments (BOI) or any prior BOI certification as a condition precedent for their entitlement to the benefit of the zero percent (0%) VAT vis-a-vis their sales of goods to PASAR and on their "sales of gold to the BSP . " 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. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group