VAT Ruling No. 028-00

August 21, 2000 VAT RULING NO. 028-00 RMO 9-2000 000-00 Karina, Inc. 33 Shaw Boulevard Pasig City Attention: Clemens Domogall General Manager Gentlemen : This refers to your letter dated June 6, 2000 requesting, in effect, for the clarification of the automatic VAT zero-rating scheme in connection with your purchases or products for export, in relation to Revenue Memorandum Order No. 9-2000. SACHcD It is represented that you are an export trading company, and are engaged 100% in export; that since 1977, you have been registered with the BOI as an export trader as evidenced by your BOI Certificate of Registration No. 75-35; that you are also a VAT-registered and zero-rated enterprise; that the nature of your business is in selling mainly to overseas supermarkets and discount chains, often at a minimal margin of three percent (3%) or less; that because of the risk involved, you now request for a special ruling which will allow the sellers, mostly distributors of multi-national brands (like Nestle, Colgate, etc.), not to exchange you any VAT at the time of purchasing; that by not being charged the VAT outright, it will enable you to become more competitive, and thus help you increase Philippine exports very substantially. In reply, please be advised that pursuant to Revenue Memorandum Order (RMO) No. 9-2000, sales of goods, properties or services by VAT-registered suppliers to BOI-registered exporters shall be treated as automatically zero-rated sales; without need of prior approval from this Office, provided that supplier and the BOI-registered buyer are both VAT-registered taxpayers and provided further that the buyer is classified as 100% exporter by the Board of Investments (BOI) . HCSDca At this time, this Office is unable to issue a certification to the effect that you are a 100% export trader, since there is no attached certification to this effect from the BOI. Nevertheless, to be entitled to the benefit of zero-rating pursuant to RMO 9-2000, it would be incumbent upon you, as the buyer, to furnish the seller with proof, usually in a current certification by the BO I, that you are an exporter with 100% export sales. If the said certification is presented, the seller may then recognize the transaction as a zero-rated sale by issuing a duly-registered VAT invoice with the notation "zero-rated" clearly imprinted or stamped therein. Additionally, the seller must likewise indicate in the VAT invoice the BOI-registry number and/or reference to the certification issued by the BOI. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group