VAT Ruling No. 098-92

August 13, 1992 VAT RULING NO. 098-92 NIRC Sec. 100 (a) (1) 103 (u) Precedent Ruling 040-92 Group Management Corporation International Trading Division The Exchange Corner Bldg. 107 Herrera St., cor. Esteban and Bolanos Sts. Legaspi Village, Makati Metro Manila Attention: Lourdes B. Tavanlar Executive Assistant Gentlemen : This has reference to your letter dated May 24, 1991 stating that your company, Group Management Corporation (GMC), is a prospective export-trader of rattan furnitures, wrought iron furnitures and baskets. In this connection, you would like to be clarified on the applicability of the value-added tax (VAT) on your planned export activity. In reply, please be informed as follows: 1. Only your direct export sales can be zero-rated pursuant to Section 100(a)(1) of the Tax Code. Under Section 2 of Revenue Regulations No. 2-88, zero-rating can only be extended to the suppliers of raw material to BOI-registered export-producer exporting at least 70% of its annual production. 2. Your sub-contractors who are BOI-registered shall be exempt from VAT under Section 3 of Revenue Regulations No. 2-88. 3. If your sub-contractors are not BOI-registered, their services shall be subject to the 10% VAT which can be passed on to you. Input taxes attributable to your export sales can be claimed as tax credit/refund pursuant to Section 106 of the Tax Code. DAHCaI Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue