VAT Ruling No. 080-92

June 22, 1992 VAT RULING NO. 080-92 R.R. 2-88 246-90 Asiawealth Apparel Corp. 4th Floor Glass Tower Bldg. 115 Alvarado Street Legaspi Village Makati, Metro Manila Attention: Ms. Alma Bella N. Beronilla Controller S i r s : This has reference to your letter dated April 10, 1991 stating that your company is an export-oriented, labor-intensive garment manufacturer with BOI-Registration No. EP 88-339 and VAT Registration No. 34-5-003413: and that you produce goods which are exported directly as well as accept subcontract work for other VAT and BOI-registered exporters. Based on the foregoing, you now request information as to the taxability of your labor services rendered to BOI and VAT-registered companies where the goods produced by said entities are 1) directly exported; and 2) sold domestically. In reply, please be informed that pursuant to Section 3 of Revenue Regulations No. 2-88, BOI-registered subcontractors performing services such as processing, converting or manufacturing goods for other BOI-registered exporters exporting at least 70% of their total production are exempt from VAT. Such being the case, your sub-contracting services to other BOI-registered exporters are exempt from VAT provided your customer-exporters export at least 70% of their total annual production. However, for labor services rendered by BOI-registered subcontractors to other BOI-registered entities where the goods produced by the latter are sold domestically, such transactions are subject to VAT pursuant to Sec. 102(a) of the Tax Code, as amended. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner Officer-in Charge