VAT Ruling No. 047-00

October 26, 2000 VAT RULING NO. 047-00 SGV & Co. 6760 Ayala Avenue Makati City Attention: Mr . E . C . Alcantara Tax Division Gentlemen : This refers to your letter dated November 17, 1999, for and in behalf of your client, CARGILL PHILIPPINES, INC., requesting for a confirmation of your opinion that for purposes of applying for refund of input taxes attributable to export sales, it is not necessary for the exporter to prove the inward remittance and conversion to Philippine pesos of its export sales. In reply, please be informed that Section 106(A)(2)(a)(1) of the National Internal Revenue Code of 1997 provides: "(2) [Zero-rated Sales] The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: "(a) Export Sales . The term 'export sales' means: "(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) ;" The term " and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) is implemented by BSP Circular No. 1389 dated April 13, 1993 the pertinent portion of which provides: "Sec. 20. Disposition of Export Proceeds . Foreign exchange receipts, acquisitions or earnings of residents from exports may, at the option of said exporter, be sold for pesos to AABs or outside the banking system, retained, or deposited in foreign currency accounts, whether in the Philippines or abroad and may be used freely for any purpose. LLpr "xxx xxx xxx" "Accordingly, your opinion that export sales paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP qualify as zero-rated sales even if the proceeds thereof are not converted to Philippine pesos, is hereby confirmed." (BIR Ruling No. 176-94 vis-a-vis query of San Miguel Corporation) Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group