VAT Ruling No. 029-02

April 30, 2002 VAT RULING NO. 029-02 Sec. 106 (2) (a) VAT Ruling No. 107-88 Convenience Distribution Inc. #8 Mercury Ave., Bagumbayan Libis, Quezon City Attention: Jose Victor P. Paterno President Gentlemen : This refers to your letter dated October 17, 2001 seeking for a favorable approval of your application for registration as a zero-rated Value Added Tax exporter of locally processed and packaged food products to other 7 Eleven stores in Asia such as those located in Taiwan, Malaysia, Singapore, South Korea and Thailand. It is represented that your company, Convenience Distribution Inc. (CDI for brevity), is a domestic corporation engaged in the business of trading, distributing and supplying goods, commodities, chattels and other articles of commerce and in connection therewith, operating for maintaining warehouses, storages, delivery vehicles and similar or incidental facilities; that CDI is the warehouse and distribution arm of Philippine Seven Corporation tasked with supplying the merchandise being sold in all 7-Eleven Stores; that beginning 2003, CDI sees the opportunity of offering its services in importing as well as exporting merchandise to other ASEAN countries with 7 Eleven stores. In view thereof, you are now requesting for the approval of zero-rated VAT to apply on items that will be exported by your company. In reply, please be informed that Section 106(A)(2)(a) of the 1997 Tax Code, as implemented by Section 4.100-2(a) of Revenue Regulations No. 7-95, as amended, subjects to zero percent (0%) rate: "(a) Export Sales. The term 'export sales' means: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" Moreover, please be informed that as a VAT registrant, your direct export sales are automatically zero rated; hence there is no need to file an application for zero rate. (Vat Ruling 107-88). In view of the foregoing, your application for registration as a zero-rated Value-Added Tax exporter of locally processed and packaged food products is hereby granted. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered 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