VAT Ruling No. 055-89

March 15, 1989 VAT RULING NO. 055-89 Bush Boake Allen Philippines, Inc. WCI Building, Fairlane St. Corner Brixton, Pasig Metro Manila Attention: C . M . Camodoc Company Accountant S i r s : This refers to your letter dated October 10, 1988 seeking clarification on the request of Shell Chemical (Philippines) Inc. to exempt from VAT their purchases from Bush Boake Allen Philippines, Inc. of raw materials to be used in the formulation of insecticides. In addition, it is represented that your customer Shell Chemical Co. is a BOI registered enterprises. In reply thereto, please be informed that pursuant to Section 103 (c) of the Tax Code, as amended by E.O. 273, the sale of Chemicals for the formulation of pesticides (insecticides included) is exempt from VAT. However, Bush Boake Allen Philippines, Inc., by opting to register for VAT purposes, relinquished this exempt status [Sec. 18(c), Revenue Regulations No. 5-87)]. Thus, all sales of Bush Boake Allen Philippines, Inc., regardless of end-use, are subject to VAT. Shell Chemical Co. can, in turn, claim the VAT on its purchases of raw materials as an input tax against its output tax. However, if the Board of Investments (BOI) endorses that Shell Chemical Co. exports at least 70% of its output then the sale of Bush Boake Allen can qualify for an effective zero-rating under Section 2 of Revenue Regulations No. 2-88. LLjur Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner