Zero rated sales

SALE OF GOODS
-FOREIGN COUNTRY (export sale) which is paid for in foreign currency or its equivalent in goods or
services, and accounted for with the rules and regulations of BSP, irrespective of any shipping
arrangement

-PERSON ENGAGED IN INT’L SHIPPING or AIR TRANSPORT OPERATION (N! sale and lease of goods, supplies,
equipment, fuel and services shall be used exclusively for int’l shipping or air transportation purposes)

-REGISTERED ENTERPRISES WITHIN A SEPARATE CUSTOM TERRITORY as provided under special laws

-REGISTERED ENTERPRISES WITHIN TOURISM ENTERPRISE ZONES as declared by the Tourism

Infrastructure and Enterprise Zone Authority

-PERSON OR ENTITIES COVERED BY SPECIAL LAWS or INTERNATIONAL AGREEMENTS where PH is a

signatory
-sale to Asian Development Bank
-sale to International Rice Research Institute
-sale to duly registered accredited enterprises with Subic Bay Metropolitan Authority
-sale to duly registered and accredited enterprises with Clark Development Authority
-sale to registered and accredited enterprises with Phil. Economic Zone Authority (PEZA)

Zero rated sales of goods subject to 12% VAT if conditions are satisfied

-SALE OF RAW MATERIALS OR PACKAGING MATERIALS TO A NONRESIDENT BUYER for delivery to a

resident local export oriented enterprise to be used in manufacturing, processing, packing or repacking
in the PH of the said buyer goods and paid for in acceptable foreign currency and accounted for in
accordance with the rules and procedures of BSP

-SALE OF RAW MATERIAL OR PACKAGING MATERIALS TO EXPORT-ORIENTED ENTERPRISE whose export

sales exceed 70% of the total annual production

-SALES TO BONDED MANUFACTURING WAREHOUSES of export-oriented manufacturers

-SALES TO EXPORT PROCESSING ZONES

-SALES TO ENTERPRISES duly registered with THE SUBIC BAY METROPOLITAN AUTHORITY
-SALES TO REGISTERED EXPORT TRADERS OPERATING BONDED TRADING WAREHOUSES supplying raw
materials in the manufacture of export products under guidelines to be set by the Board in consultation
with the BIR

-SALES TO DIPLOMATIC MISSIONS AND OTHER AGENCIES AND/OR INSTRUMENTALITIES GRANTED TAX
IMMUNITIES, of locally manufactured, assembled or repacked products whether paid for in foreign
currency or not
Sales of Services and lease of properties

-TRANSPORT OF PASSENGERS AND CARGO BY DOMESTIC AIR OR SEA VESSELS from PH to a foreign
country

-SERVICES RENDERED TO PERSON ENGAGED IN INT’L SHIPPING or AIR TRANSPORT OPERATION (N! these
services shall be used exclusively for int’l shipping or air transportation purposes)

-SALE OF POWER OR FUEL THROUGH RENEWABLE SOURCES OF ENERGY such as

-biomass, solar, wind, hydropower, geothermal, ocean energy, fuel cells and hydrogen
fuels (N! zero-rated sales shall not extend to sale of services related to the maintenance or operation of plants
generating said power)

-SERVICES RENDERED TO REGISTERED ENTERPRISES WITHIN A SEPARATE CUSTOM TERRITORY as

provided under special laws

-SERVICES RENDERED TO REGISTERED ENTERPRISES WITHIN TOURISM ENTERPRISE ZONES as declared

by the Tourism Infrastructure and Enterprise Zone Authority

-SERVICES OTHER THAN PROCESSING, MANUFACTURING OR REPACKING rendered to a person engaged

in business conducted outside the PH or to a non-resident person not engaged in business who is
outside the PH when the services are performed the consideration for which is paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of BSP

-SERVICES RENDERED TO PERSONS OR ENTITIES WHOSE EXEMPTED UNDER SPECIAL LAWS OR

INTERNATIONAL AGREEMENTS to which the PH is a signatory

Zero rated sales and lease of services subject to 12% VAT if conditions are satisfied

-PROCESSING, MANUFACTURING OR REPACKING OF GOODS FOR OTHER PERSONS doing business

outside the PH which goods are subsequently exported where the services are paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of BSP

-SERVICES PERFORMED BY SUBCONTRACTORS AND/OR CONTRACTORS IN PROCESSING, CONVERTING

OR MANUFACTURING GOODS FOR AN ENTERPRISE whose export sales exceed 70% of the total annual
production

Conditions to be satisfied to subject a Zero rated sales into a 12% vat sale

1. Successful establishment and implementation of an ENHANCED VAT REFUND SYSTEM that grants
refunds of creditable input tax within 90 days from the filing of the VAT refund application with the
Bureau. (To determine the effectivity, all applications filed from January 1, 2018 shall be processed and
must be decided within 90 days from the filing of the VAT refund application
2. All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December 31,
2019