VAT Ruling No. 084-99

August 10, 1999 VAT RULING NO. 084-99 R.R. 7-95-027-99-084-99 Honda Parts Manufacturing Corporation Laguna Technopark, Phase II Bian, Laguna Attention: Mr. Reynaldo B. Mendoza Manager, Business Management Department Gentlemen : This refers to your letter dated May 28, 1999 seeking the opinion of this Office as to whether or not the sales of parts by your company, Honda Parts Manufacturing Corporation (Honda), which is a PEZA-registered company, to other PEZA-registered companies still require prior approval in order to be considered zero rated sales. In reply, please be advised that, provided the buyer is an Ecozone Export Enterprise or one engaged in export activities, intra-zone sales may be classified as effective zero-rated transactions under the Cross-Border Doctrine of the VAT system (VAT Ruling No. 027-99). However, under Revenue Regulations No. 7-95, except for actual export sale, all other cases of zero-rated sales shall require prior application with the Revenue District Office for the effective zero-rating of the proposed transaction. Without an approved application for effective zero-rating, the transaction otherwise entitled to zero-rating shall merely be considered exempt. (Sec. 4.107-1(d) RR 7-95).This is so inasmuch as this Office needs to make a prior confirmation of the export status of the buyer considering that, under the law, the sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group