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    Tax Digest Abellanida

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    John Abellanida
    (1) Atlas Consolidated Mining and Development Corporation (ACMDC) filed a case against the Commissioner of Internal Revenue (CIR) regarding whether sales to enterprises operating within export processing zones are considered export sales. (2) The ruling cited Article 23 of the Omnibus Investments Code of 1987 which considers constructive exportation, including sales to export processing zones, as export sales. Article 77 further supports this by stating goods brought into export processing zones from the customs territory are considered export sales. (3) The court concluded that Section 2 of Revenue Regulations No. 2-88 should not apply to ACMDC's applications for refund/credit of input VAT since it based these on the zero-

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    Tax Digest Abellanida

    Uploaded by

    John Abellanida
    20 views2 pages
    (1) Atlas Consolidated Mining and Development Corporation (ACMDC) filed a case against the Commissioner of Internal Revenue (CIR) regarding whether sales to enterprises operating within export processing zones are considered export sales. (2) The ruling cited Article 23 of the Omnibus Investments Code of 1987 which considers constructive exportation, including sales to export processing zones, as export sales. Article 77 further supports this by stating goods brought into export processing zones from the customs territory are considered export sales. (3) The court concluded that Section 2 of Revenue Regulations No. 2-88 should not apply to ACMDC's applications for refund/credit of input VAT since it based these on the zero-

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    (1) Atlas Consolidated Mining and Development Corporation (ACMDC) filed a case against the Commissioner of Internal Revenue (CIR) regarding whether sales to enterprises operating within export processing zones are considered export sales. (2) The ruling cited Article 23 of the Omnibus Investments Code of 1987 which considers constructive exportation, including sales to export processing zones, as export sales. Article 77 further supports this by stating goods brought into export processing zones from the customs territory are considered export sales. (3) The court concluded that Section 2 of Revenue Regulations No. 2-88 should not apply to ACMDC's applications for refund/credit of input VAT since it based these on the zero-

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    20 views2 pages

    Tax Digest Abellanida

    Uploaded by

    John Abellanida
    (1) Atlas Consolidated Mining and Development Corporation (ACMDC) filed a case against the Commissioner of Internal Revenue (CIR) regarding whether sales to enterprises operating within export processing zones are considered export sales. (2) The ruling cited Article 23 of the Omnibus Investments Code of 1987 which considers constructive exportation, including sales to export processing zones, as export sales. Article 77 further supports this by stating goods brought into export processing zones from the customs territory are considered export sales. (3) The court concluded that Section 2 of Revenue Regulations No. 2-88 should not apply to ACMDC's applications for refund/credit of input VAT since it based these on the zero-

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION (ACMDC),

    vs.
    COMMISSIONER OF INTERNAL REVENUE (CIR).

    ISSUE:
    Whether sales to enterprises operating within the export processing zones are export
    sales.

    RULING:
    Without actual exportation, Article 23 of the Omnibus Investments Code of 1987 also
    considers
    constructive exportation as export sales, and these are the following:
    (1) sales to bonded manufacturing warehouses of export-oriented manufacturers;
    (2) sales to export processing zones;
    (3) sales to registered export traders operating bonded trading warehouses supplying raw
    materials used in the manufacture of export products under guidelines to be set by the
    Board in consultation with the Bureau of Internal Revenue and the Bureau of Customs; and
    (4) sales to foreign military bases, 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

    Article 77, paragraph 2 of the same Code provides that "Merchandise purchased by a
    registered zone enterprise from the customs territory and subsequently brought into the
    zone, shall be considered as export sales and the exporter thereof shall be entitled to the
    benefits allowed by law for such transaction."

    Such tax treatment of goods brought into the export processing zones are only consistent
    with the
    Destination Principle and Cross Border Doctrine to which the Philippine VAT system
    adheres.
    According to the Destination Principle, goods and services are taxed only in the country
    where
    these are consumed. In connection with the said principle, the Cross Border Doctrine
    mandates that
    no VAT shall be imposed to form part of the cost of the goods destined for consumption
    outside the
    territorial border of the taxing authority. Hence, actual export of goods and services
    from the
    Philippines to a foreign country must be free of VAT, while those destined for use or
    consumption
    within the Philippines shall be imposed with 10% VAT. Export processing zones are to be
    managed
    as a separate customs territory from the rest of the Philippines and, thus, for tax
    purposes, are
    effectively considered as foreign territoryPlainly, sales to enterprises operating within
    the export processing zones are export sales, which,under the Tax Code of 1977, as
    amended, were subject to 0% VAT.

    The court in conclusion states that Section 2 of Revenue Regulations No. 2-88, which
    applied to zero-rated export sales to export-oriented BOI-registered enterprises, should
    not be
    applied to the applications for refund/credit of input VAT filed by petitioner corporation
    since it
    based its applications on the zero-rating of export sales to enterprises registered with
    the EPZA and
    located within export processing zones.

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