VAT Ruling No. 048-88

March 1, 1988 VAT RULING NO. 048-88 102 (a)-000-00-048-88 Philippine Ocean Lines, Inc. Ground Floor, UPL Building Sta. Clara St., Intramuros Manila Attention: Mr . Alberto B . Matti Vice-President & Gen . Manager Gentlemen : This refers to your letter dated January 7, 1988 stating your company is an agent of a foreign shipping line whose business is cargo shipping and manning. You would like to known whether your income derived from commission which is equivalent to a certain percentage of basic freight, in case of cargo shipping, and management fee, in case of manning services is subject to value-added tax of 10%. In reply, please be informed that pursuant to Section 102 (a) (2) of the Tax Code, as amended by Executive Order No. 273, services other than processing, manufacturing or repacking of goods, the consideration for which is paid for in acceptable foreign currency which is remitted inwardly to the Philippines and accounted for in accordance with the rules and regulations of the Central Bank of the Philippines shall be subject to the value-added tax at 0%. Should your income from commissions be paid in any acceptable foreign currency and remitted as required above, then your company is subject to VAT at 0%. Accordingly, if you have been paying the 4% contractor's tax and the 7% commercial broker's tax imposed by Sections 170 and 174 of the Tax Code, you will no longer pay the same starting Jan. 1, 1988. However, you will continue to pay for the account of your foreign principals the 3% common carrier's tax. cdtech Very truly yours, BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue