VAT Ruling No. 031-91

May 29, 1991 VAT RULING NO. 031-91 Babcock-Hitachi (Philippines) Inc. 2305 Pasong Tamo Extension Makati, Metro Manila Attention: Mr . A . M . Santiago, Jr . Vice President Gentlemen : This refers to your letters dated October 30 and November 8, 1990 requesting information whether your subcontractor (AG&P Co. of Manila, Inc.) may be considered exempted from the 10% Value-Added Tax. It is represented that you are a BOI-registered enterprise with BOI Certificate of Registration No. EP 89-1421, issued June 9, 1989; that ,AG & P is likewise BOI-registered as a preferred pioneer enterprise with BOI Registered Certificate No. 83-553, issued August 2, 1983, as amended on January 8, 1987, for the production of "steel fabrication";that, you subcontracted to AG&P the production of "power boiler components" which you will export to Hawaii, U.S.A. In reply, please be informed that transactions which are tax-exempt under the provisions of special laws are exempted from 10% VAT, pursuant to Section 103(u), NIRC, as amended by E.O. 273. Under Article 39(e) of the Omnibus Investments Code, as amended by E.O. 226, "The registered enterprise shall be exempt from the payment of contractor's tax, whether national or local". The term, contractor's tax, heretofore found in the old NIRC had been replaced by the Value Added Tax now found in the NIRC, as amended by E.O. 273. It follows, AG&P which enjoys exemption from the said contractor's tax is also exempted from the 10% VAT, pursuant to Section 103(u), NIRC, in relation to Article 39(e) of the Omnibus Investments Code, as amended. Because of the foregoing, there is no necessity for this Office to resolve whether AG&P may be exempted from 10% VAT based on the provisions of Revenue Regulations No. 2-88. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue