VAT Ruling No. 027-93

May 4, 1993 VAT RULING NO. 027-93 Section 104-106 (a)-014-90 027-93 Consolidated Industrial Gases, Inc. CIGI Bldg., Sheridan Street Mandaluyong, Metro Manila Attention: Ms . Milagros S . Millan Financial Accounting Manager S i r s : This has reference to your letter dated March 26, 1993, stating that your company sells industrial gases to Global Lighting Philippines, Inc. (GLPI), a BOI-registered exporter of incandescent bulbs, Christmas lights, autobulbs and the electronic and electrical components thereof. Furthermore, as per verbal verification from your office, the industrial gases being purchased GLPI are being used as raw materials in the manufacture of the abovementioned products. In your billings to GLPI, you included the 10% VAT which they refuse to pay since they claim that their purchases from you are subject to zero-rate citing Revenue Regulations No. 2-88. llcd Based on the foregoing you now request for a ruling on whether your sale of industrial gases to GLPI is zero-rated or subject to the 10% VAT. In reply, please be informed that since the industrial gases you sell to Global Lighting Philippines, Inc. are to be used as raw materials in the manufacture of export products, it may qualify for effective zero-rating provided the requirements under Revenue Regulations No. 2-88 in relation to Sec. 8(d) of Revenue Regulation No. 5-87 are met. However, if you opt not to avail for effective zero-rating under said regulations, you can include the 10% VAT in your billings to GLPI since VAT, being an indirect tax, may be passed on to them which they can claims as input tax credit attributable to their export sales (Sec. 104 of the Tax Code). Moreover, such input tax may be credited or refunded by this Office subject to the following conditions (1) A claim for refund as tax credit is filed with this Office within two years from date of exportation; (2) Proof/evidence that the foreign exchange proceeds of the export sale/s has been inwardly remitted to the Philippines and accounted for in accordance with the regulations of the Central Bank of the Philippines; (3) The amount of input tax attributable to goods reported has not been previously applied/credited against GLPI's output tax due on their local sales (Sec. 106(a) of the Tax Code). Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner (Officer-in-Charge)