VAT Ruling No. 045-91

May 29, 1991 VAT RULING NO. 045-91 Sakamoto Orient Chemicals Corp. Unit 5D Plaza Royale 120 Alfaro St., Salcedo Village Makati, Metro Manila Attention: Mr . Cesar F . Cabanas Acctg . & Adm . Mgr . Gentlemen : This refers to your letter dated January 4, 1991 requesting for a reconsideration of our letter to you, dated November 20, 1990, advising that "sales of raw materials to export-oriented BOI-registered enterprises may qualify for the benefits of zero-rated Value Added Tax provided, however, that the export sales of the BOI-registered enterprise exceed seventy percent (70%) of its total annual production " consistent with the requisites of Section 2, Revenue Regulations No. 2-88, promulgated on February 15, 1988. Records show that your company is a BOI-registered enterprise engaged in the refining and exporting (100%) of "Glycerine". It started commercial operation on May, 1990. For its first year operation its commitment with the BOI was to produce and export at least 5,000 metric tons of refined glycerine. Since you only started operation during the first semester of the year 1990 your company was required by the BOI in its letter dated August 2, 1990 to export at least 3,333 metric tons of refined glycerine before your company may be considered as having complied with its export commitment for the year 1990. However, during the year 1990 your company's actual exportation only amounted to 2,682.06 metric tons of refined glycerine, hence, your request that your purchase of raw materials during the year 1990, beginning May 30th, be subjected to zero-rated VAT, had been denied. You are, however, requesting that the said denial be reconsidered allegedly because the 70% track record requirement under Section 2 of Revenue Regulations No. 2-88 lacks statutory basis that it is only a requirement of the BOI and not of the BIR. Please be informed that your herein request for reconsideration is denied consistent with the doctrine that, the implementing regulations of a law are part of the said law. Since, the said 70% export sale is a requisite for qualification to zero-rated purchases of raw materials by BOI-registered export oriented enterprises, which requisite you did not meet during the year 1990, your aforesaid request for zero-rated VAT is necessarily also without legal basis. LLpr Very truly yours, JOSE U. ONG Commissioner of Internal Revenue