VAT Ruling No. 040-89

February 21, 1989 VAT RULING NO. 040-89 Marsman Tours & Travel Corp. Marsman Bldg. Sen. Puyat Ave., Makati Rizal Attention: Ms . Carmencita Alano Controller S i r s : This has reference to your application for zero-rate of your sale of services, which, as verbally represented, are rendered to foreign tourists whose modes of payment are as follows. LLphil (a) Service is paid by foreign affiliates in foreign currency inwardly remitted in accordance with Central Bank rules and regulations. (b) Service for inbound tours is paid by the tourists in foreign currency which is converted into pesos through a special dollar account. In reply, please be informed that as VAT registrant the service income from your foreign affiliate is automatically zero rated pursuant to Section 102(a) (1) of the Tax Code as amended by E.O. 273. Thus, there is no need to seek prior approval of an application for zero rate. On the other hand, the service income for inbound tours does not qualify for zero rating since payment in foreign currency is not in accordance with Central Bank rules and regulations. Such being the case the said service is subject to the 10% VAT which, together with your zero-rated sales shall be filed on a quarterly basis. cdll Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner