VAT Ruling No. 054-88

March 8, 1988 VAT RULING NO. 054-88 102 (a)-000-00-054-88 Mr. Jose V. Angeles President Philippine Constructors Association, Inc. 3rd Floor, Padilla Building Emerald Ave., Ortigas Commercial Center Pasig, Metro Manila Dear Sir : This has reference to your letter dated January 26, 1988 requesting that the sales by suppliers to primary contractors in the US Military Bases be subject to zero-rate. In reply, please be informed that under Sec. 8 of Rev. Reg. No. 5-87, the sale of services to the US Military Bases are effectively zero-rated with the exemption status of the grantee, the US Military facility, being extended to its supplier of services in this case the primary contractor. Since the tax-exempt status is limited only to the primary contractor, the sale of its suppliers cannot be subject to zero-rate. However, upon approval of the request of the primary contractor for zero rating, then all input taxes on his purchases of raw materials which form part of his gross contract and his zero-rated receipts shall be entitled to refund or tax credit at the option of the primary contractor. cdta Very truly yours, BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue