VAT Ruling No. 061-91

June 26, 1991 VAT RULING NO. 061-91 Philippine International Trading Corporation (PITC) P.O. Box 1056, MCC, Makati Metro Manila Attention: Ms . Christabelle P . Ebriega OIC-Special Products Msdg . Dept . Gentlemen : This refers to your letter dated October 3, 1990 requesting information whether sale by your VAT-registered suppliers of goods to you for subsequent sale or resale under you Internal Exports Program pursuant to LOI No. 1355 can remain subject to zero-rated VAT even if there will be a change in the pricing scheme, viz., you will ask your suppliers to quote their selling prices in terms of the Philippine peso rather than in US dollar unlike your present system whereby your suppliers quote their selling prices in terms of the US dollar. It is represented that your present pricing scheme, viz., your suppliers quoting their selling prices in US dollar makes the said goods uncompetitive compared to the average selling prices in the retail outlets, hence, you proposed new pricing scheme quoted in terms of the peso. llcd In reply, please be informed that the PITC has been designated under LOI No. 1355 to implement the Incentives For Internal Exports , pertinent portion of which provides: "1. It is hereby declared to be a policy of the State to encourage the patronage of Philippine made products by providing appropriate incentives therefor, to Filipinos abroad and other non-residents of the Philippines, as well as returning overseas Filipinos. 2. Goods paid for in foreign exchange by the above-mentioned persons shall be governed by the following: a) Goods assembled or manufactured in the Philippines for household and personal use, when paid for in convertible foreign currency inwardly remitted through the banking system in the Philippines, termed as foreign exchange denominated series of internal exports, shall be exempt from the payment of gift taxes an percentage tax on sales under the National Internal Revenue Code, as amended. b) Products sold under this program shall be distributed by the Philippine International Trading Corporation, the implementing agency for such program, to ensure effective implementation. Under Section 100(a), NIRC, as implemented by Sec. 8(b) (1) of Revenue Regulations No. 5-87, internal exports under LOI No. 1355 are subject to zero-rate, even if your suppliers will quote on peso prices under your pricing scheme, provided that the goods are sold to the qualified buyers and paid for in acceptable foreign currency inwardly remitted to the Philippines. cdll Very truly yours, JOSE U. ONG Commissioner of Internal Revenue