VAT Ruling No. 029-01

May 22, 2001 VAT RULING NO. 029-01 Sec. 106 (A) (2) Woodstock Exports Inc . 304 Alabang Zapote Road (Behind Banco de Oro, Las Pias Branch) Las Pias City 1740 Attention: Carolina S . Esguerra Managing Directress Gentlemen : This refers to your letter dated 13 December 2000 concerning your request for exemption from the value added tax (VAT). It is represented that you are engaged in the manufacture of handicrafts; that, the same are 100% exported to Germany and the U.S.A., and that you are a VAT-registered person as shown in your BIR Certificate of Registration No. 9RC0000029441, issued on 13 March 2000. In reply, please be informed that, as a VAT-registered person, you are governed by the provisions of the VAT Law under Title IV of the National Internal Revenue Code of 1997 (NIRC), hence, your export sales of handicrafts are not merely exempt from the 10% VAT. On the contrary, your said export sales are entitled to the benefit of the zero percent (0%) VAT, pursuant to Section 106 (A) (2) (a), NIRC. As such, you shall be entitled to a refund or credit of your input taxes attributable to your export sales, pursuant to Section 112 (A), NIRC, as follows: "SEC. 112. Refunds or Tax Credits of Input Tax . "(A) Zero-rated or Effectively Zero-rated Sales . Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales." 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