VAT Ruling No. 031-02

April 30, 2002 VAT RULING NO. 031-02 RMC 74-99 VAT 047-01 Mustang Security Agency, Inc. 89 Lim-an Street, Pasay City Metro Manila Attention : Mr. Erwin A. Unay Accountant Gentlemen : This refers to your letter dated May 28, 1999 regarding confirmation of your opinion that your sale of security services to Philippine Bobbin Corporation, a corporation registered with PEZA under Registration Certificate No. 91-06 located at Cavite Economic Zone is subject to VAT at zero-percent (0%). In reply, please be informed that Revenue Memorandum Circular No. 074-99 provides that " . . . any sale of goods, property or services made a by a VAT-registered supplier from the Customs Territory to any registered enterprise operating in the ecozone, regardless of the latter's PEZA registration, is actually qualified and thus legally entitled to the zero percent (0%) VAT. Accordingly, all sale of goods or property to such enterprise made by a VAT-registered supplier from the Customs Territory shall be treated subject to 0% VAT, pursuant to Section 106(A) (2)(a)(5), NIRC, in relation to Article 77(2) of the Omnibus Investment Code, while all sales of services to the said enterprises made by VAT-registered suppliers from the Customs Territory shall be treated effectively subject to the 0% VAT pursuant to Section 108(B)(3), NIRC, in relation to provisions of R.A. 7916 and the "Cross Border Doctrine" of the VAT system. This Circular shall serve as sufficient basis to entitle such supplier of goods, property or services to the benefit of the zero percent (0%) VAT for sales made to the aforementioned ECOZONE enterprises and shall serve as sufficient compliance to the requirement for prior approval of zero-rating imposed by Revenue Regulations No. 7-95 effective the issuance of this Circular." In view of the foregoing, this Office hereby confirms your opinion that your sale of security services to Philippine Bobbin Corporation, a PEZA-registered enterprise, is subject to 0% VAT. It is understood, however, that your corporation should use and issue only a duly registered VAT sales invoice/official receipt on which the word "zero-rated" is imprinted thereon, to cover the aforesaid zero-rated sales, pursuant to the provisions of Sec. 4-108-1 of Revenue Regulations No. 7-95, otherwise known as the Consolidated Value-Added Tax Regulations. (VAT Ruling No. 47-2001 dated July 16, 2001) This Ruling is being issued on the basis of the facts represented. If, upon investigation, it will be disclosed that the facts are different, then this Ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group