VAT Ruling No. 049-89

March 8, 1989 VAT RULING NO. 049-89 Marikina Cottage Craft Corporation 11 N. Roxas Street, San Roque Marikina, Metro Manila Attention: Mr . Celso P . Buccat President S i r s : This has reference to your letter dated December 3, 1988 requesting confirmation of the VAT exemption of Marikina Cottage Craft Corporation. It was represented that Marikina Cottage Craft Corporation has an existing agreement with Multicraft Development Corporation, a BOI-registered exporter, to process semi-processed items; that for the above service, Marikina Cottage Craft Corporation supplies the labor and incurs incidental overhead costs; and, that Marikina Cottage Craft Corporation bills Multicraft Development Corporation for the processing cost based on agreed rates. In reply, please be informed that since Marikina Cottage Craft Corporation supplies labor and incurs incidental expenses, the contracting transaction partakes the nature of a service subject to VAT. However, considering that Marikina Cottage Craft Corporation is a subcontractor/ contractor processing goods for a BOI-registered exporter, it can qualify for VAT exemption upon registration with the Board of Investments (Section 3 of Revenue Regulations No. 2-88). cdtech Please be guided accordingly. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner