VAT Ruling No. 045-93

December 22, 1993 VAT RULING NO. 045-93 RMO 22-92-033-93-045-93 Romulo, Mabanta, Buenaventura Sayoc and delos Angeles Fourth Floor, King's Court 2129 Pasong Tamo Makati, Metro Manila Attention: Ms . Wilma V . Valdemor-Cua and Ms . Catherine T . Manahan Gentlemen : This refers to your letter September 8, 1993 on behalf of your client, Dae Eun Electronics (Phils.), Inc. It is represented, that said company is a SEC, EPZA and VAT-registered enterprise engaged in the business of manufacturing, processing and exporting modular telephone jacks, plugs, cords and other raw materials ("products") for use in the telecommunications industry. Since the start of its commercial operations, the company has engaged in direct export of 98% of its finished products. The rest, or 2% of its products are sold to Maxon Systems (Phils.) Inc., an EPZA-registered enterprise, exporting 100% of its electronic goods. The products sold by your client to Maxon serve as raw materials to the goods being directly exported by the latter. Based on the foregoing, you now seek for a ruling confirming that your client's sale to Maxon Systems (Phils.), Inc. is zero-rated in relation to Article 77(1) of the Omnibus Investments Code as contained in Revenue Memorandum Order No. 22-92. In reply, please be informed that since the products your client, Dae Eun Electronics (Phils.), Inc., sells to Maxon Systems (Phils.), Inc. serve as raw materials to the finished goods manufactured by and directly exported by the latter, the sale thereof shall be zero-rated in accordance with Section 2 of Revenue Regulations No. 2-88 as clarified by Revenue Memorandum Order No. 22-92. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue