January 19, 2007

BIR RULING [DA-031-07]

RMC 74-99; DA 603-96

Jen & Janette Junkshop

Sambat, Tanauan City

Attention: Mrs. Flor Ofrin

Proprietress

Gentlemen :

This has reference to your letter dated November 29, 2006 requesting clarification on the alleged
conflicting opinion of the BIR: the one issued by the BIR-San Pablo and the one issued by the BIR-
National Office appertaining to the same set of facts.

It is represented that Jen & Janette Junkshop (J & J for brevity), is engaged in the business of buying
scrap metal from business enterprises located within the Philippine Economic Zone Authority (PEZA).
One of the enterprises that sells scrap metals imposes the 12% VAT in addition to the 12% VAT which
the Bureau of Customs collects prior to the release of the same to the customs territory. In sum, J&J is
paying a total of 24% value-added tax everytime it hauls from PEZA for the same specific items.

In reply, please be informed that the sale of goods by a PEZA enterprise to a buyer from custom
territory, is treated as technical importation made by the buyer. In such event, the buyer is considered
as importer thereof and shall be liable for the corresponding value-added tax on importation (see
Revenue Memorandum Circular No. 74-99)

Apparently, Ibiden is imposing or collecting the 12% VAT on your every purchase of metal scrap because
it knows for a fact that such sale is subject to VAT. However, such value-added tax payment is supposed
to answer for the alleged technical importation that ultimately will be remitted to the government. In
which case, the Bureau of Customs is no longer required to collect the value-added tax before the scrap
metal is taken out from PEZA.

Thus, to clear all conflicts, and considering that J & J is an importer in this case, the payment of the
value-added tax on importation should be made by J & J directly to the Bureau of Customs as the agency
tasked to collect the VAT on importation. Resultantly, Ibiden is not anymore required to impose VAT on
every sale of metal scrap. Ibiden, however, should be furnished a copy of the receipt of the payment of
the VAT with the Bureau of Customs.

This will be therefore serve as your authority to request Ibiden to refrain from imposing VAT on the sale
of scrap to J & J since the Bureau of Customs is also collecting the same before the goods are purchased
and released.

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon
investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and
void. aSECAD
Very truly yours,

(SGD.) JAMES H. ROLDAN

Assistant Commissioner

Legal Service