VAT Ruling No. 054-92

April 28, 1992 VAT RULING NO. 054-92 NIRC Sec. 102 (a) (2) Precedent Ruling 083-83 SGV & Company, CPAs P.O. Box 256, Makati Central Post Office 1299 Metro Manila Attention: Mr. F.G. Tagao Tax Division Gentlemen : This refers to your letter dated May 23, 1991 requesting for a confirmation that your client, PHILIPPINE SINTER CORPORATION (PSC) is subject to zero percent VAT, pursuant to the provisions of Section 102(a)(2), NIRC, viz.: "Services . . . 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." It is represented that one of the principal businesses of PSC is tugging services for a fee (i.e., docking and undocking of foreign vessels to facilitate the unloading of their incoming cargo; that, PSC bills its clients-foreign vessel owners in U.S. dollar and its Philippine peso equivalent; that, the said foreign vessel-owners have shipping agents in the Philippines; that the said foreign owners remit payments in foreign exchange thru their said Philippine shipping agents to pay for your billings; that these foreign exchange inward remittances are accounted for in accordance with the Central Bank rules and regulations (i.e., converted into Philippine peso) and that your client is accordingly paid for by the said shipping agents already in terms of the Philippine peso. In reply, please be informed that the premises of the aforequoted provisions of Section 102(a)(2), NIRC, is that a VAT-registered person's sales of services are paid for in foreign exchange, provided, said payment is inwardly remitted and accounted for according to the Central Bank rules and regulations. This means the said foreign exchange payment have been surrendered to the Central Bank for conversion into Philippine peso. These premises of the law are complied with based on facts submitted. In view thereof, this Office hereby confirms that your client's sales of services to the aforementioned foreign owners of vessels, is subject to zero percent VAT, pursuant to Section 102(a)(2), NIRC. TCcDaE Very truly yours, JOSE U. ONG Commissioner of Internal Revenue By: (SGD.) EUFRACIO D. SANTOS Deputy Commissioner Officer-in-Charge