VAT Ruling No. 050-97

July 11, 1997 VAT RULING NO. 050-97 Sec. 102 (b) (3)-000-050-97 Nippon Express Philippines Corporation 14F Valero Tower, 122 Valero St., Salcedo Village, Makati City Attention: Masaaki Aoto Asst . General Manager Accounting Department S i r : This refers to your letter dated February 12, 1996 stating that Nippon Express Philippines Corporation is a VAT-registered entity engaged in freight forwarding; that it is established as a joint undertaking of prominent Filipinos and Nippon Express Company of Japan; that the company's main source of revenue is sales of service; that majority of its customers are mostly Japanese companies located in export processing zones and some of its invoices to customers are foreign currency denominated. cdta Based on the foregoing, you now request confirmation whether or not your company is qualified for zero-rating under letter B, No. 3 and letter C of Section 4, 102-2 of Revenue Regulations 7-95, implementing Republic Act No. 7716, otherwise known as the Expanded Value-Added Tax Law. In reply, please be informed that Section 102 (b)(3) of the Tax Code, as amended by R.A. No. 7716, as implemented by Revenue Regulations 7-95 provides that the sale by a VAT-registered person or entity who was granted indirect tax exemption under special laws or international agreements shall be zero rated. It must be emphasized that effectively zero-rated transactions shall be limited to the local sale of services to persons or entities who enjoy exemptions from indirect taxes under subparagraph (b) Nos. 3, 4, and 5 of RR 7-95. Moreover, your company must apply for effective zero rating of its sale of services with the Revenue District Office having jurisdiction over your principal office or place of business. Such being the case, gross receipts from the sale of service by your company to companies duly accredited by the Export Processing Zone Authority shall be effectively zero-rated. cdti Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue