VAT Ruling No. 030-92

March 11, 1992 VAT RULING NO. 030-92 NIRC Sec. 102 (a) (2) Precedent Ruling 498-83 DOCL (Phils.) Inc. 7th Flr., Equitable Bank Bldg. Salcedo St., Legazpi Village Makati, Metro Manila Attention: Wilfredo A. Hans Finance & Administrative Officer S i r s : This refers to your letters dated June 21 and August 15, 1991 requesting confirmation of your opinion that transactions of DOCL (Phils) Inc. falls under zero-rate (0%) value-added tax on their services as general agents of shipowners. It is represented that DOCL (Phils) Inc. is a VAT registered general agent for persons or entities engaged in marine and maritime business; that their commissions for such services are paid for in acceptable foreign currency and are remitted inwardly to the Philippines and accounted for in accordance with the Central Bank rules and regulations; and that the charges of such services are for the account of the foreign principal and billing is made directly to such foreign principal through the shipping agents. In reply, please be informed of the following: 1. Services, the consideration of which are paid for in acceptable foreign currency remitted inwardly to the Philippines and accounted for in accordance with the rules and regulations of the Central Bank are subject to the 0% VAT rate. 2. From the payments to be made by foreign shipping companies, commissions/fees of the general agents, for services rendered to them may be deducted from their freight collections before their remittance abroad to the foreign principals abroad subject to Central Bank approval, pursuant to the Central Bank letter dated July 7, 1988 which states that such portion of freight collections of foreign shipping companies which are used to pay services rendered to them are "deemed inwardly remitted funds" provided that in all cases, prior Central Bank approval is secured by foreign shipping lines to deduct said fund from the remitted freight collections. Accordingly, commissions and fees to be derived by DOCL (Phils) Inc., as general agents, for services rendered to foreign shipping lines under the above stated representations of facts are subject to 0% VAT rate. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue