VAT Ruling No. 051-00

October 30, 2000 VAT RULING NO. 051-00 Pilipinas Hino Incorporated EDSA corner Madison Street Mandaluyong City Metro Manila Attention: Ms . Visitacion A . Mejia Accounting Manager Gentlemen : This refers to your letter dated August 6, 1999 inquiring whether or not the sale by your company of one (1) unit of cargo truck to Automotive Interiors Corporation, a PEZA-registered Export Enterprise is entitled to the benefit of zero-rating for VAT purposes. It is represented that the cargo truck is to be used in the operations of the PEZA-registered buyer in connection with the delivery of its products to customers. In reply, please be advised that Rule XV, Section 1(D) of the Rules Regulations to Implement Republic Act No. 7916 provides as follows: "D. Importation of Specialized Vehicles and Other Transportation Equipment . Specialized vehicles and other specialized transportation equipment, including necessary spare parts, directly related to the registered activity of the ECOZONE Export of Free Trade Enterprise, may be imported exempt from customs duties and taxes only upon prior approval of the Board and with proper clearance from the appropriate government agency(ies). Otherwise, ordinary vehicles and other transportation equipment, including necessary spare parts, whenever applicable, shall be procured locally ." Otherwise stated, the rules extend the benefit of tax exemption only to the importation of specialized vehicles and other transportation equipment, and that if what will be involved is the purchase of ordinary vehicles and transportation equipment, the same has to be procured locally which necessarily includes all component duties and taxes, such as value-added tax. (Revenue Memorandum Circular No. 25-99 dated March 18, 1999) Since there is no importation involved and there is no showing of a specialized nature of the vehicle purchased, this Office is of the opinion, and so holds that the purchase of one (1) unit cargo truck is not entitled to the benefit of zero rating. Very truly yours, (SGD). DAKILA B. FONACIER Commissioner of Internal Revenue