VAT Ruling No. 041-00

October 23, 2000 VAT RULING NO. 041-00 108 (B) (1) VAT Ruling 010-99 Sunflower Umbrellas Manufacturing Co ., Inc . 126-128 Kaingin Road Balintawak, Quezon City Attention: Ms . Letty Balonan General Manager Gentlemen : This refers to your letter dated October 18, 1999 requesting for an exemption certificate from the payment of value-added tax for your export sales: It is represented that Sunflower Umbrellas Manufacturing Company, Inc. (Sunflower) is a domestic corporation organized and registered with the Securities and Exchange Commission with SEC Reg. No. 140856 on May 26, 1987; that Sunflower manufactures umbrellas as a labor subcontractor for foreign companies in other countries; that these foreign companies send their raw materials for assembling which Sunflower for assembling which Sunflower re-exports; and that these foreign companies remit the subcontractors' fees in US dollars to Sunflower through the local banks upon export of the finished goods; and that as per documents submitted, Sunflower is a non-VAT taxpayer. In reply, please be informed that Section 108(B)(1) of the Tax Code of 1997 provides, viz: "Sec. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties . xxx xxx xxx (B) Transactions subject to Zero Percent (0%) Rate . The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" In view thereof, considering that you are not a VAT-registered taxpayer, you cannot enjoy the benefit of the zero percent (0%) VAT. ASEIDH 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, then this ruling shall be considered null and void. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group