VAT Ruling No. 036-99

March 26, 1999 VAT RULING NO. 036-99 109 (j)-283-88-036-99 RFC Freight Corporation Rm. 108 Bataan Ext. cor. Bagumbayan St., Sta. Mesa Manila Attention: Ms . Beta Gutierrez Gentlemen : This refers to your letter dated February 24, 1999 stating that your company, RFC, is engaged in freight forwarding; that you render service to your client which is a an exporter of canned tuna and whose export sales are zero-rated; that RFC advances the payment of freight to shipping lines which is then included in your bill to the client; that the shipping lines do not bill you for input tax because the freight is for export; that you now would want to confirm whether it is correct for you not to subject to VAT the amount representing the ocean freight as advanced by you in your billing for brokerage services to your client. In reply, please be advised that in the foregoing transaction, only the brokerage fee is subject to the 10% VAT and that the advances you made for ocean freight on export shipments are exempt from the said tax as the same is subject to percentage tax under Section 109(j) in relation to Section 118 of the Tax Code of 1997, but provided that: 1) You issue a VAT invoice/receipt corresponding to the amount of brokerage fee; 2) The advances are billed separately and a non-VAT receipt is issued to your client for the total amount advanced; 3) Each person or entity who directly renders service to your client for whom you advanced the payment, shall issue a receipt/invoice in the name of your client; For liquidation purposes, you may attach the original copy of all invoices/receipts issued in the name of your client to your not-VAT receipt reflecting the total amount being reimbursed to you. (BIR Ruling No. 283-88 dated July 4, 1988). This ruling is being issued on basis of the facts as represented. If upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. cdll Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group March 26, 1999 VAT RULING NO. 036-99 109 (j)-283-88-036-99 RFC Freight Corporation Rm. 108 Bataan Ext. cor. Bagumbayan St., Sta. Mesa Manila Attention: Ms . Beta Gutierrez Gentlemen : This refers to your letter dated February 24, 1999 stating that your company, RFC, is engaged in freight forwarding; that you render service to your client which is a an exporter of canned tuna and whose export sales are zero-rated; that RFC advances the payment of freight to shipping lines which is then included in your bill to the client; that the shipping lines do not bill you for input tax because the freight is for export; that you now would want to confirm whether it is correct for you not to subject to VAT the amount representing the ocean freight as advanced by you in your billing for brokerage services to your client. In reply, please be advised that in the foregoing transaction, only the brokerage fee is subject to the 10% VAT and that the advances you made for ocean freight on export shipments are exempt from the said tax as the same is subject to percentage tax under Section 109(j) in relation to Section 118 of the Tax Code of 1997, but provided that: 1) You issue a VAT invoice/receipt corresponding to the amount of brokerage fee; 2) The advances are billed separately and a non-VAT receipt is issued to your client for the total amount advanced; 3) Each person or entity who directly renders service to your client for whom you advanced the payment, shall issue a receipt/invoice in the name of your client; For liquidation purposes, you may attach the original copy of all invoices/receipts issued in the name of your client to your not-VAT receipt reflecting the total amount being reimbursed to you. (BIR Ruling No. 283-88 dated July 4, 1988). This ruling is being issued on basis of the facts as represented. If upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. cdll Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group