REVENUE
MEMORANDUM
ORDER
NO.
9-2000
issued
March
29,
2000
prescribes
the
conditions
for
the
automatic
zero-rating
of
sales
of
goods,
properties
and
services
made
by
VAT-registered
suppliers
to
BOI-registered
manufacturers-exporters
with
100%
export
sales,
to
wit:
1)
the
supplier
must
be
VAT-registered;
2)
the
BOI-registered
buyer
must
likewise
be
VAT-registered;
3)
the
buyer
must
be
a
BOI-registered
manufacturer/producer
whose
products
are
100%
exported
as
certified
by
the
BOI;
4)
the
BOI-registered
buyer
shall
furnish
each
of
its
suppliers
with
a
copy
of
the
BOI
Certification;
and
5)
the
VAT-
registered
supplier
shall
issue
for
each
sale
to
BOI-registered
manufacturer/exporters
a
duly-registered
VAT
invoice
with
the
words
"zero-rated"
stamped
thereon.
VAT;
Sale
to
BOI-registered
supplies;
Implications
-
Section
3
of
RMO
No.
9-2000
provides
that
sales
of
goods,
properties,
or
services
made
by
a
VAT-registered
supplier
to
a
BOI-registered
exporter
shall
be
accorded
automatic
zero-rating,
i.e.,
without
necessity
of
applying
for
and
securing
approval
of
the
application
for
zero-rating
as
provided
in
Revenue
Regulations
No.
7-95.
1.
Since
IPMI
is
a
BOI-registered
enterprise
and
at
the
same
time
a
VAT-registered
taxpayer
as
shown
by
its
Certificate
of
Registration
No.
EP-97-319
duly
issued
by
the
Board
of
Investments
as
a
100%
exporter
and
Certificate
of
Registration
No.
000-125-079
duly
issued
by
the
Bureau
of
the
Internal
Revenue
while
its
supplier,
HPPC,
is
likewise
a
VAT-registered
company
with
VAT
Registration
No.
003-956-
294-000,
in
accordance
with
the
aforementioned
conditions
of
RMO
9-2000,
the
sale
by
HPPC
of
home
PCs
to
IPMI
shall
be
subject
to
zero-percent
(0%)
VAT
pursuant
to
Section
3
of
RMO
No.
9-2000.
2.
Section
3(1)
(a)
of
RMC
No.
74-99
provides
that
sales
made
by
a
VAT-registered
supplier
to
a
PEZA-
registered
enterprise
shall
be
subject
to
zero-percent
(0%)
VAT
pursuant
to
Section
106(A)(2)(a)(5)
of
the
Tax
Code
of
1997
and
Section
23
of
RA
No.
7916.
The
sale
by
HPPC
of
home
PCs
to
ITPI,
a
PEZA-registered
enterprise
shall
be
subject
to
zero-percent
(0%)
VAT
pursuant
to
Section
106(A)(2)(a)(5)
of
the
Tax
Code
of
1997
as
clarified
in
RMC
No.
74-99.
However,
the
VAT
Registration
of
ITPI
is
considered
as
an
erroneous
registration,
thus,
ITPI
is
not
entitled
to
input
taxes
on
its
purchases
of
home
PCs
from
HPPC.
3.
As
represented,
IPMI
and
ITPI
shall
grant
home
Personal
Computers
to
the
employees
in
consonance
with
the
objective
to
develop,
improve
internet,
e-
business
and
PC
skills
and
likewise
to
advance
Intel
products
to
the
said
employees
and
their
families.
Thus
the
grant
of
said
benefits
is
necessary
to
the
trade
or
business
of
IPMI
and
ITPI.
However,
since
there
is
no
clear
showing
on
whether
or
not
ownership
to
said
personal
computers
shall
be
immediately
transferred
to
the
employees
the
following
the
tax
implications:
(a)
If
ownership
and
possession
is
transferred
to
the
employees,
the
grant
to
managerial
and
supervisory
employees
is
subject
to
the
fringe
benefits
tax
(FBT)
imposed
under
Section
33
of
the
Tax
Code
of
1997,
as
implemented
by
Revenue
Regulations
No.
3-98
while
those
granted
a
rank-and-file
employees
shall
be
subject
to
the
tax
imposed
under
Section
24(A)(1)(c)
of
the
same
Code
and,
consequently,
to
the
withholding
tax
on
compensation
under
Revenue
Regulations
No.
2-98,
the
valuation
of
which
shall
be
the
entire
acquisition
cost
of
the
computers.
In
this
case,
the
value
of
the
benefits
consisting
of
the
acquisition
cost
of
the
computers
shall
be
taken
up
under
the
Fringe
Benefits
expense
account,
not
capitalized,
and,
therefore,
not
subject
to
depreciation.
(b)
If
ownership
over
said
computers
is
retained
by
IPMI
and
ITPI
and
only
the
right
of
usufruct
is
transferred
to
the
employees,
it
is
our
opinion
that
50%
of
the
monetary
value
of
said
benefit
is
subject
to
the
FBT,
if
granted
to
the
managerial
and
supervisory
employees,
or
to
the
withholding
tax
on
compensation
in
the
case
of
the
rank-and-file
employees,
applying
by
analogy
the
rules
on
the
FBT
imposed
on
the
grant
of
motor
vehicles
under
Sec.
2.33(B)(3)(e)
of
Revenue
Regulations
No.
3-98.
While
computers,
and
other
office
equipment,
do
not
exactly
belong
to
the
category
of
motor
vehicles,
yet
the
application
of
the
FBT
rule
on
motor
vehicles,
which
are
not
entirely
used
in
business,
in
so
far
as
company-owned
equipment
are
concerned,
is
in
order,
for
both
are
similarly
situated.
Corollary
to
this,
generally
accepted
accounting
principles
dictate
that
the
acquisition
cost
of
the
computers
shall
be
capitalized
and
subjected
to
the
periodic
depreciation
charges
which
are
allowable
as
deductions
for
income
tax
purposes,
together
with
the
fringe
benefits
tax
paid
thereon.
(BIR
Ruling
No.
074-2000
dated
December
22,
2000)
