VAT Ruling No. 057-03

December 15, 2003 VAT RULING NO. 057-03 Sec. 4 (A) (e) Hoya Marine Corp. G/F 888, Sta. Rita Road Subic Bay Freeport Zone Olongapo City Gentlemen : This refers to your letter dated June 23, 2003 requesting for a ruling as to whether or not the services rendered by a VAT-registered taxpayer in the customs territory to a Subic Bay Freeport Enterprise can be considered as a zero-rated sale of service. It is represented that Hoya Marine Corporation is a registered Subic Bay Freeport Enterprise engaged in bunkering and water supply, lighterage, boat and launch service, harbor tug and towing service, shipping and cargo forwarding, ship chartering and brokering, ship management and consultancy services in Subic Bay Freeport Zone; that your vessel M/T Hoya Grace moved to Manila for dry-docking at R & R Shiplift Systems, Inc. and that you were charged with 10% VAT on the dry-dock and repairs services rendered by R & R Shipyard in Manila; that your tax incentives as a Subic Bay Freeport Enterprise is effective until June 25, 2003 but may be renewed upon compliance with terms and conditions under R. A. 7227 and its Implementing Rules and Regulations. TSacAE In reply, please be informed that under Section 4(A)(e) of Revenue Regulations No. 1-95, purchases of . . . services, by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory shall be considered EFFECTIVELY ZERO-RATED for VAT purposes. However, the VAT-registered enterprises in the Customs Territory" shall APPLY FOR EFFECTIVE ZERO-RATING OF THEIR SALES OF goods. and SERVICES to SBMA and to SBF enterprises in order that its sales can be entitled to zero-rating. In view thereof, the sale of service to you by R & R Shipyard in Manila can only be zero-rated if it has already an approved application for effective zero-rating on the said sale of service, otherwise, the said sale shall only be exempt from VAT. This ruling is issued based on the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then the ruling shall be considered as null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group