VAT Ruling No. 085-92

July 2, 1992 VAT RULING NO. 085-92 Art. 77 (1) of E.O. 226 and NIRC Sec. 103 (u) Precedent Ruling 041-92 Pacific Rare Metal Industries, Inc. 3rd floor, Estuar Building 41 Timog Avenue, Quezon City Attention: Ms. Angelita M. Bondad Finance Manager Gentlemen : Referring to your letter of June 14, 1991 please be informed that ARTICLE 77(1) of the Omnibus Investments Code of 1987, (E.O. No. 226), cited in your query as Section 17(1), P.D. No. 66, provides as follows: "Except as otherwise provided in this Code, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise whether directly or indirectly related in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the provisions of law to the contrary notwithstanding." (ARTICLE 77(1), ibid ) Section 103(u), NIRC, as amended by E.O. No. 273, otherwise known as the VAT Law, also provides: "Transactions which are exempt under special laws or international agreements to which the Philippines is a signatory" shall be exempted from the value added tax law. Since as represented your Corporation is EPZA-registered and accordingly governed by ARTICLE 77(1) of the said Omnibus Investments Code of 1987, your suppliers of goods enumerated in the said law, are exempted (not zero-rated) from value added tax pursuant to said Art. 77(1) in relation to Section 103(u), NIRC. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue