VAT Ruling No. 060-89

March 21, 1989 VAT RULING NO. 060-89 Intertranz Freighters, Inc. 3/F NBV Building 1191 M. Orosa Street Ermita, Manila Attention: Ms. Anne Ferrer Tumibay General Manager Sirs : This refers to your letter dated October 4, 1988 requesting a ruling on the applicability of the value-added tax on your business activities of forwarding goods and merchandise by ship, receiving, picking up and consolidating cargo and distributing the same within any point in the Philippines and/or to and from any point of the world. As verbally represented, your company makes an advance payment to the ocean carrier for the ocean freight after which you bill the shipper as a reimbursement of the entire freight charge. In addition, you also charge a certain amount of handling fee which is paid in local currency by domestic shippers (for incoming freight) and in foreign currency by your foreign agents (for outgoing freight). In reply, please be informed that the advance payment for the ocean freight will not be subject to VAT provided that the amount advanced for ocean freight is recorded as an advance and that the amount received as reimbursement is likewise shown in the books of account as reimbursement. However, when services are performed for domestic shippers as a forwarding agent, the fees charged for such service are subject to 10% VAT pursuant to Section 103 (a) of the Tax Code as amended by EO 273. If such service is paid for in foreign currency by your foreign agents, then it is subject to 0% provided that such inward remittance is in accordance with the rules and regulations of the Central Bank [Section 102 (a) (2) of the Tax Code as amended]. cDCEIA Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner