VAT Ruling No. 088-90

April 6, 1990 VAT RULING NO. 088-90 100/102-000-00-088-90 Rotal Construction No. 1 July St. Congressional Village Quezon City Attention: Mr . Rogelio S . Talastas General Manager S i r s : This refers to your letter dated November 24, 1989 requesting that your services rendered for the construction of the Tuguegarao Public Market at Tuguegarao, Cagayan be granted exemption for VAT purposes. It is represented that said government project is being managed by the Economic Support Fund Secretariat and has been funded out of the proceeds of the Economic Support Fund under the RP-US Military Bases Agreement. In reply, please be informed that pursuant to the RP-US Military Bases Agreement and the bilateral agreement between the two governments exempting the proceeds of the Economic Support Fund (ESF) from the Philippine government tax and other impositions, the use of the fund to finance government projects which are paid directly from said fund are within the purview of effectively zero-rated transactions contemplated under Sections 100(a)(2) and 102(a)(3) of the Tax Code. In other words, billings by the seller of goods or services who executed the projects funded by ESF shall not include the value-added tax: Provided, however, that the seller of said goods or services shall first apply for zero rating in accordance with Section 8(d) of Revenue Regulations No. 5-87. LLphil This finds support in BIR Ruling No. 513-88 dated October 21, 1988. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue