August 6, 1999

VAT RULING NO. 075-99

112 (A)
439-88
075-99

Frabelle Fishing Corporation

1051 North Bay Boulevard
Navotas, Metro Manila

Attention: Mr. Valentino C. Labanda

Gentlemen :

This refers to your letter dated April 16, 1999 requesting further
clarification of BIR Ruling No. 174-98 dated December 11, 1998 which ruled
that as a Non-VAT Registered taxpayer, your company can not claim
exemption from input VAT being passed on to you by your suppliers of
supplies, parts, fuels, etc.
Relative to above ruling, query is now posed on whether Frabelle can
register its export sales as zero-rated so that it can claim tax credit or refund
the input taxes charged by its suppliers on purchases attributable or
allocable to the amount of its export sales and, at the same time, have its
local sales remain as exempt from VAT as provided under Section 109 (c) of
the 1997 Tax Code. cdasia

In reply, please be informed that Section 236 (I) of the 1997 Tax Code
provides for the optional registration of exempt persons, as follows:
"(I) Optional Registration of Exempt Person . — Any person whose
transactions are exempt from value added tax under Section 109(z) of
this Code, or any person whose transactions are exempt from the value
added tax under Section 109(a), (b), (c) and (d) of this Code who opts
to register as a VAT taxpayer with respect to his export sales only, may
update his registration information in accordance with Subsection (E)
hereof, not later than ten (10) days before the beginning of the taxable
quarter and shall pay the annual registration fee prescribed in
Subsection (B) hereof."

Such being the case, your opinion is hereby confirmed. Accordingly,

Frabelle may register as VAT taxpayer with respect to its export sales and
claim its corresponding input taxes for refund or credit in accordance with
Section 112(A) of the same Code and, at the same time, remain exempt
from VAT on its local sales. However, input taxes attributable to its local
sales can not be claimed as input tax credits as provided under Section 110
of the Tax Code nor can these be claimed for refund or tax credits under
Section 112 as these shall remain as part of the cost of supplies so
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 purchased, provided that input taxes which can not be directly and entirely
attributed to the export sales or exempt sales of Frabelle shall be allocated
proportionately on the basis of volume of sales.
This ruling is issued on the basis of the facts represented. If upon
investigation, it will be disclosed that the facts are different, then this ruling
shall be considered null and void. LexLib

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
(Local & Enforcement Group)

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