VAT Ruling No. 036-02

May 21, 2002 VAT RULING NO. 036-02 Sec. 3 (1) (b) VAT Ruling No. 032-98 Panorama Property Ventures, Inc. 1029 EDSA Quezon City Attention: Cristina Cabasag Accounting Manager Gentlemen : This refers to your letter dated November 21, 2001, inquiring whether you can still apply for a tax credit/refund from the BIR for value-added taxes paid on zero-rated transaction notwithstanding the issuance of a memorandum dated August 21, 2001 from the Commissioner stating that the claimant should seek reimbursement of the erroneously billed VAT from his supplier. It is represented that your company, Panorama Property Ventures, Inc. (PPVI) is a PEZA registered enterprise entitled to the 5% preferential gross income tax rate in lieu of national and local taxes; that pursuant to RMC 74-99, sales made by a VAT registered supplier from the customs territory shall be subject to zero rate VAT; that on several instances, your suppliers have erroneously billed you with the 10% VAT despite the fact that the transaction is zero rated under RMC 74-99; that you have applied for a tax refund of the said VAT from BIR Revenue District Office No. 57 and the same was rejected because of the August 21, 2001 memo from the Commissioner. You now seek reconsideration of the denial arguing that what you are applying for are tax credits on transactions made prior to August 21, 2001 hence, should not be covered by the aforesaid memo. In reply, please be informed that Section 3(1)(b) of Revenue Memorandum Circular No. 74-99 dated October 15, 1999, provides for the automatic VAT zero rating of sales made by a VAT registered supplier from the customs territory to a PEZA registered enterprise under the cross border doctrine of the VAT system, pursuant to VAT Ruling No. 032-98 dated November 5, 1998. It is clear from the above RMC that as early as October 15, 1999, sales made by a VAT registered supplier to a PEZA registered enterprise is subjected to the 0% rate. Therefore, any erroneously billed VAT arising from such transactions after October 15, 1999 should be reimbursed from the concerned supplier and not from the BIR as reiterated by the August 21, 2001 memorandum of the Commissioner, advising claimants to seek reimbursement of these erroneously billed VAT from their supplier. In view of the foregoing, your company should seek reimbursement from your respective suppliers who have erroneously billed you the 10% VAT on your purchases. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, than this ruling shall be considered null and void. aECSHI Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group