VAT Ruling No. 037-92

March 24, 1992 VAT RULING NO. 037-92 NIRC Sec. 102 (a) (2) Precedent Ruling 069-91 BHP Philippines Trading, Inc. Unit C, 9th Floor A.C.T. Tower Condominium Sen. Gil J. Puyat Avenue, Makati, Metro Manila Attention: Rudin A. Gonzales, Jr. General Manager Dear Sir : This refers to your letter dated August 30, 1991 requesting for a ruling whether or not commissions received by you from foreign suppliers for soliciting orders from local companies which are paid for in foreign currency will qualify as a zero-rated sale under Section 102(a)(2) of the Tax Code, as amended. It is represented that you are a domestic corporation and a VAT-taxpayer solely engaged in the indenting business; that your business involves soliciting orders from local companies and communicating said orders abroad; that each contract of sale is entered into between the local buyer and foreign suppliers, with the local supplier opening the necessary letter of credit in favor of the foreign supplier which shipped the goods directly to the local buyer; that the commission's paid by the foreign supplier for your indent services are paid for in foreign currency which are inwardly remitted to the Philippines and accounted for in accordance with rules and regulations of the Central Bank. In reply, please be informed that the indent services which you performed for a foreign principal which are paid for in foreign currency and inwardly remitted to the Philippines in accordance with Central Bank rules and regulations are effectively zero-rated pursuant to Section 102(a)(2) of the Tax Code, as amended by E.O. 273 and amplified by Section 8(b) of Revenue Regulations No. 5-87. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue