VAT Ruling No. 068-97

October 14, 1997 VAT RULING NO. 068-97 Sec. 4A (e); 93-95; 068-97 Aegis Integrated Structure Corporation Rm. 1905 Cityland 10 HV dela Costa Extension Ayala Ave., Makati City Attention: Mr . Rosario U . Briones Gentlemen : This refers to your letter dated 15 August 1997 asking clarification whether the sale of services by your company, Aegis Integrated Structure Corporation, to Toyo Construction (SUBIC), Inc., a registered Subic Bay Freeport Enterprise, will qualify for effectively zero-rated VAT pursuant to Section 4A(e) of Revenue Regulations No. 1-95. LLpr It is represented that Aegis Integrated Structure Corporation is a domestic corporation engaged in the services of design, supply, fabrication, delivery and erection of structural steel requirements; that one of its clients is Toyo Construction (SUBIC), Inc., a registered Subic Bay Freeport Enterprise with Registration No. 96-0036 issued by Subic Bay Metropolitan Authority, hence, this request for effective zero-rating. In reply, please be informed that Section 4A(e) of Revenue Regulations No. 1-95, implementing the tax incentives provisions under paragraphs (b) and (c) of Section 12, R.A. 7227, otherwise known as the Bases Conversion and Development Act of 1992, provides as follows: "SEC. 4. Exemptions and Incentives . . . A. ALL SBMA registered enterprises doing business within the Secured Area in the Zone shall enjoy the following: xxx xxx xxx c. Purchases of raw materials, capital goods and equipment and services by the SBMA and SBF accredited enterprises from enterprises in the Customs Territory shall apply for the 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 SBF enterprises pursuant to Revenue Regulations No. 5-87, as amended." Accordingly, purchases of services by SBMA and SBF accredited enterprises from your company, AEGIS INTEGRATED STRUCTURE CORPORATION, which consist of design, supply, fabrication, delivery and erection of structural steel requirements, shall be considered effectively zero-rated for VAT purposes. Provided, however, that your company, aside from being VAT-registered, shall apply for effective zero-rating on its sales of services to SBMA and SBF enterprises in accordance with Revenue Regulations No. 5-87, as amended. (BIR Ruling No. 93-95 dated June 15, 1995). This ruling is being issued to Aegis Integrated Structure Corporation based on the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. aisadc Very truly yours, SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner Legal Service