VAT Ruling No. 086-88

April 18, 1988 VAT RULING NO. 086-88 103 (u) / (v)-000-00-086-88 Proton Chemical Industries, Inc. Barangay Caridad Ibaba Atimonan, Quezon Attention: Mr . Mariano F . Castro VP - Treasurer Gentlemen : This refers to your letter dated February 4, 1988 stating that you are a BOI-registered export producer of Coco Chemicals Under P.D. No. 1789 and B.P. No. 391; and that the raw material used in your export product is coconut oil supplied by the local oil mills which are subject to the value-added tax (VAT); that you want to withhold the VAT from your payment to the coconut oil mill suppliers; that you will remit to the BIR the VAT withheld from the individual suppliers; and the remittance receipt will read as follows: cdi "Received from Proton Chemical Industries, Inc. for the account of X Company"; that, each suppliers will be given a copy of the receipt of VAT remittances. It is represented that under your proposal, you will be able to expedite your claim for tax refund/issuance of tax credit under and by virtue of your tax incentives as a BOI-registered enterprise because you can readily show proof of payment of the value-added tax on your purchase of raw materials. By obtaining prompt refund of the VAT element in your purchase of crude/coconut oil, your cost of money will be reduced; thus, allowing your product to be more competitive in the world market. It is ascertained that similar request has been granted for miller's tax in our letter to you dated June 20, 1985. In reply, please be informed that as a BOI-registered export producer enjoying the benefits of VAT exemption under both Section 103 (u) and/or 103 (v) of the Tax Code, as amended by Executive Order No. 273, you are not registrable under Section 107 (d) of the same Code. Such being the case, you cannot claim the benefit of zero-rating of your export sales under Section 100 (j) of the Tax Code. However, to avail yourself of your various tax incentives from the Board of Investments wherein proof of tax payment is required to support your claim for refund/tax credit, you are hereby authorized to withhold the VAT from your payment to the millers/suppliers of crude and/or refined coconut oil for remittance to the Bureau of Internal Revenue under the following terms and conditions: 1. that all sales invoices to be issued by your suppliers should indicate the VAT separately; 2. that as a withholding agent of your supplier, you will remit to the B.I.R., the VAT withheld from your suppliers every 20th day following the end of each month; 3. that the remittance receipt to be issued by the B.I.R. Collection Agent should indicate: "Received from Proton Chemical Industries, Inc. for the account of ( Name of crude/oil supplier). " 4. that the supplier shall be furnished with a copy of the said remittance receipt evidencing the payment of the VAT on the sale to you. cdtech Very truly yours, BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue By: VICTOR A. DEOFERIO, JR. Deputy Commissioner