REGULATIONS GOVERNING THE APPLICATION OF ZERO-RATE, EXEMPTION ON CERTAIN TRANSACTIONS RELATED TO EXPORTERS, AND REFUNDS OF INPUT TAXES.
amend Sections 8 and 16 of Revenue Regulations 5-87, governing the
application of the zero rate and exemption on transactions of sellers of
raw materials, contractors and/or subcontractors with BOI-registered
firms, and claims for refund of input taxes.
SECTION 2. Zero-rating . —
a. Sales of raw materials to BOI-registered exporters:
— Sales of raw materials to export-oriented BOI-registered enterprises
whose export sales, under rules and regulations of the Board of
Investments, exceed seventy percent (70%) of total annual production,
shall be subject to zero-rate under the following conditions:“(1) The seller shall file an application with the BIR, ATTN.:
VAT Division, applying for zero-rating for each and every separate
buyer, in accordance with Section 8(d) of Revenue Regulations No. 5-87.
The application should be accompanied with a favorable recommendation
from the Board of Investments.”“(2) The raw materials sold are to be used exclusively by the
buyer in the manufacture, processing or repacking of his own registered
export product;“(3) The words “Zero-Rated Sales” shall be prominently indicated
in the sales invoice. The exporter (buyer) can no longer claim from
the Bureau of Internal Revenue or any other government office tax
credits on their zero-rated purchases;(b) Sale of raw materials to foreign buyer:
— Sales of raw materials to a nonresident foreign buyer for delivery to
a resident local export-oriented BOI-registered enterprise to be used
in manufacturing, processing, or repacking of the said buyer’s goods and
paid for in foreign currency, inwardly remitted in accordance with
Central Bank rules and regulations shall be subject to zero-rate.
SECTION 3. Exemption of BOI-registered subcontractors or contractors for exporters
. — BOI-registered subcontractors or contractors performing services,
such as processing, converting, or manufacturing goods for a
BOI-registered exporter who exports at least 70% of its total production
shall be exempt under the provisions of Sec. 103(u) of the Tax Code.
SECTION 4. Refunds of input taxes . — Refund
of input taxes for zero-rated sale of goods under Section 2 of these
regulations shall be allowed only upon presentation of documents of
liquidation evidencing the actual utilization of the raw materials in
the manufacture of goods at least 70% of which have been actually
exported.
SECTION 5. These regulations shall take effect immediately.
Adopted: 15 Feb. 1988
(Sgd.) VICENTE JAYME
Secretary of Finance