VAT Ruling No. 065-92

May 18, 1992 VAT RULING NO. 065-92 NIRC Sec. 102 (a) (2) Precedent Ruling 087-88 Trinidad H. Flores Tax Consultant 8 Chico Street Project 8, Quezon City M a d a m : This has reference to your letter dated January 2, 1992 requesting information whether your client, Barca International, a buying agent engaged in the export of garments is subject to 0% VAT or not based on the following: 1. A foreign buyer places orders to local manufacturers through the buying agent (Barca Int'l.); 2. The buying agent then gives a sales contract on behalf of the foreign buyer to the local manufacturer; 3. The local manufacturer produces the goods and ships out the same to the foreign buyer; and 4. The foreign buyer pays the local manufacturer upon receipt of finished goods in foreign currency; and the corresponding commission is paid to the buying agent also in foreign currency. In reply, please be informed that the commission income received by your client performing as a buying agent for a foreign buyer and paid for in acceptable foreign currency inwardly remitted to the Philippines in accordance with Central Bank rules and regulations are effectively zero-rated pursuant to Section 102(a)(2) of the Tax Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue