VAT Ruling No. 031-92
VAT Ruling No. 031-92 • Bureau of Internal Revenue (BIR) Issuances • VAT Rulings • Mar 11, 1992
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March 11, 1992 VAT RULING NO. 031-92 NIRC Sec. 103 (u) Precedent Ruling 031-91 Torres Law Office 209 Carriedo Street San Juan, Metro Manila Attention: Atty. Jose I. Torres Gentlemen : This refers to your letter dated January 2, 1992 requesting reconsideration of VAT Ruling No. 096-91 dated December 26, 1991, holding that your client, YTM Components, Inc., (YTM) is subject to Value-Added Tax on its production and manufacturing of low-tension wire for Yazaki-Torres Manufacturing, Inc., (YAZAKI-Torres) because such activity is not a contract of service but a contract for sale of goods. It appears that YTM, a BOI-registered producer, manufactures automotive low-tension wires for and at the order and specification of Yazaki-Torres, another BOI-registered producer; that the automotive low-tension wires are used by the latter as raw materials in the production of wiring harness; and that more than 70% of Yazaki-Torres total annual production of wiring harness are exported. In reply, please be informed that in view of strong policy considerations, this Office had decided not to revoke Revenue Regulations No. 2-88; thus, in effect, upholding previous rulings that the sale of raw materials to an export-oriented BOI-registered enterprise whose export sales, under the rules and regulations of the Board of Investments, exceed seventy percent (70%) of its total annual production, shall be zero-rated for VAT purposes, as provided in Section 2 of said regulations. (VAT Ruling No. 008-92). Such being the case, the sale of raw materials by YTM to Yazaki-Torres shall qualify for zero-rating. However, if YTM failed to comply with the procedural condition of applying and obtaining approval for zero-rating, such sale shall be considered exempt as of January 1, 1988 because the substantive bases for the availment of the privilege are deemed to exist as of said date. This supersedes VAT Ruling No. 096-91 and all previous orders or memoranda inconsistent herewith. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue
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