VAT Ruling No. 104-90

May 3, 1990 VAT RULING NO. 104-90 Dimerco Agency Group Phils., Inc. 163 Legaspi Street, Legaspi Village Makati, Metro Manila Attention: Mr . Enrique Imperial Assistant Gen . Manager S i r s: This has reference to your application for zero rate (filed on November 13, 1989) on your services rendered as an authorized general sales agent of a foreign airline (China Airline) doing business in the Philippines. As represented, such services are compensated by a 3% overriding commission which is being deducted from your ticket sales receivables, that are remittable (in dollars) to the foreign airline's head office. In reply, please be informed that as a VAT-registered entity (VAT Registration No. 32A-7-001795) the services that you render as a general sales agent of a foreign airline is automatically subject to VAT at zero per cent (0%) provided, that your commission/agent fees are paid for in foreign currency inwardly remitted in accordance with Central Bank rules and regulations. [Section 102(a) (2) of the Tax Code, as amended]. Where your fees, paid for in pesos, are deducted from the dollar remittable revenues (tickets sales receivables and converted to dollars) to your foreign airline (as allowed by the Central Bank pursuant to Section 59 of CB Circular No. 1028 dated October 12, 1984), they may be deemed inwardly remitted funds in accordance with Central Bank rules and regulations, provided that a prior CB approval for such deduction scheme has been secured. This finds support in the CB Letter to BIR Ref. No. EXAM L-604-88 dated July 7, 1988. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner