VAT Ruling No. 057-92

May 5, 1992 VAT RULING NO. 057-92 NIRC Sec. 102 (a) (2) Precedent Ruling 025-90 Anchor Insurance Brokerage Corporation 7th Floor, Peninsula Court Paseo de Roxas cor. Makati Ave. Makati, Metro Manila Attention: Ms. Preciosa V. Cunanan Chief Accountant S i r : This refers to your letter dated September 26, 1991 stating that you are a VAT-registered company engaged in business as insurance and reinsurance broker both with local and foreign reinsurers; that your placements with foreign reinsurers are duly approved by the Insurance Commission and that with the approval of a Central Bank authorized agent bank, you remit premiums due foreign reinsurers in foreign currency net of reinsurance commission/brokerage fee due your company, taxes due our government and other expenses due local ceding companies. Based on the foregoing, you now request clarification whether the amount you receive as reinsurance commission/brokerage fee from your foreign reinsurers is zero-rated and therefore not subject to the value-added tax (VAT). In reply, please be informed that in accordance with Section 8(c)(3) of Revenue Regulations No. 5-87 implementing Section 102(a)(2) of the Tax Code, as amended, services which are directly paid for in acceptable foreign currency inwardly remitted and duly accounted for in accordance with Central Bank rules and regulations will qualify for zero-rating. However, in your case, these conditions do not appear to have been observed so that your commissions from foreign reinsurance companies are subject to 10% VAT. cASIED Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner Officer-in-Charge