BIR Ruling No. 484-2017

REPUBLIC OF THE PHILIPPINFS

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quczon City

Sec. 08.109(1(T) NirC. RMC 29 RR 15-15 05. RMC 31-08. 000-00 10-19-2017 484-2017 Person to Contact: Chief, I aw Division Tel. Nos. 926-55-36/ 927-09-63

ASIAN MARINE TRANSPORT CORPORATION

Fort Bonifacio Global City. Taguig City 3rd Avenue corner 31st Street 20th Floor. Fort Legend Towers

Attention: Mr. Federico De Guzman AVP-Corporate Planning

Gentlemen:

This refers to your letter dated May 12, 2017 requesting, in cffect. for a ruling that:

1) the sale of goods, supplies, equipment and fuel to Asian Marine Transport Corporation (`AMTC")'s international ship. M/V Super Shuttle RoRo 12 ("M/V SSR 12") is subject

2) the importation of fuel, goods. supplies and equipment hy AMTC for use in the 3) the gross receipts of AM'IC arising from the operations of M/V SSR 12 is subject to zero to zero percent (0%) value-added tax (VAT): operations of M/V SSR I2 is exempt from VA'T; and

percent (0%) VAT.

Equivaient Unit). Connectivity Project of the Philippines and Indonesia with a capacity of' 100 TEUs (Twenty-foot It is represented that AMTC is the RoRo Ship Operator in the ASEAN/BIMP-EAGA Trade

The connectivity would make Davao-GenSan-Bitung as the transshipment point in the Fast

versa. and cut the timc in moving goods from certain parts of thc Philippines to Indonesia. China Palawan. grow their businesses and link their markets in Bitung and the rest of Indonesia and vice and the rest of Asia and thc worid Asian Growth Area (EAGA) set to benefit Filipino producers. especially in Mindanao and

.42+2017 10-13-2017

Page 2 of 4 Asian Marine Transport ('orp.(Internutionat Shipping)

R. Duterte and Indonesian President Joko Widodo on April 30. 2017 at Kudos Port. Sasa. Davao The ASEAN RoRo (Roll-on/Roll-off) service was launched by Philippine President Rodrigo

City.

the overseas route of Davao City-General Santos City-Bitung. Indonesia. one of its domestic ships. the M/V Super Shuttle RoRo 12 (SSR I2). to an international ship to ply As such. AMTC has duly processed with government agencies concerned the conversion of

In support ot your requcst. you attached the following documents:

2) Certificate of Approval for Conversion of M/V SSR !2 from Domestic to Foreign 3) BIR Certificate of Registration No. I) Special Permit No. Regional Office Vi1. Cebu City granting AM'IC temporary permit to operate M/V SSR 12 on April 3.2017: XII. Davao dated April 27. 2017: and Trade issued hy the Bureau of Customs (BOC). Port of Davao. Collection District issued by the Maritime Industry Authority tated August 11. 1999

Goods or Cargoes." Applying the said Circular, we rule on the issues of your concern as follows: Concerning Common Carriers by Sea and their Agents Relative to the Transport of Passengers. addressed by Revenue Memorandum Circular (RMC) No. 31 -08 regarding "Clarification of Issues In reply, please be informed that the subiect matter of your request has been sufficiently

1) The sale of goods. supplies. equipmcnt and fuel to AM'TC to be used in its international

sca transport operations is subject to VAT at zero percent (0%).

ioaded in and from another domestic port. Otherwise. any portion of such fuel. cargoes from a Philippine port directly to a foreign port. shall be subjcct to 12% VAT. to or attributable to the transport of cargoes from a Philippine port directly to a foreign equipment. goods or supplies and services used for purposcs othcr than the transport of IH owever. such sale is limited to goods. supplies. equipment. fuel and services pertaining port without docking or stopping at any other port in the Philippines to unload cargoes

Local sales of petroleum products to AMTC on a per voyage basis (i.e.: specific lifting/purchase of the fuel can be directly identified to be used hy the loading vessel for outbound international voyage) are considered cffectivcly zcro-rated.

rated VAT invoice in the name of M/V SSR I2 and supported by Delivery Receipt or In case of domcstic purchases of fuel by AMTC. considcring that the same are normally loaded directly to the international carrier. the sales thereot by its supplicrs are considered as automatically zero-rated. The domestic seller of the fuel must issuc a zero-

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Asian Aforine T'runsport (orp.(nternationul Shipping) Page 3 of 4

any document, evidencing the actuai loading of the fucl to M/V SSR 12 and duly acknowledged by its captain or duly authorized representative.

On the other hand. when M/V SSR 12 transports cargoes from one domestic port (Davao City) to another domestic port (General Santos) before proceeding to foreign port (Indonesia). the portion of fuel consumed from the first leg of the trip is suhject to the in accordance with RMC 29-05. Clarifying the Provisions of RA 9337 (VAT L.aw of 2005) applicable to Petrolcum Industry: 12% VA'r. For this purpose, the allocation should be made using the fottowing formula

Total cost of fucl allocable to domestic route Total mileage of first leg of trip. Total mileage of entire trip

The scller of the fucl shall hill the t2% VAT. and AMrC may ciaim for a tax refund/credit.

2) The tax treatment of fuel imporled by or locally sold to AMTC will depend upon the nature of its procurement.

cxcmpt Authority to Release Imported Goods (ATRIG) from the appropriate BIR office prior to the release of imported fuel from the custody of the BOC. international voyage. is exempt from VAT. However. AMTC has to secure a VAT- The direct importation by AM'IC of fuel to he used by M/V SSR 12 exctusively for its

sales to AMTC shall be subiect to the 12% VAT. AMTC can either utilize the VAT paid on the importations or local purchases of fuet as credit against their output tax liabilities. or can claim for tax refund/credit such portion of VAT payments on local as well as imported purchases that are attributable to their zero-rated sales. If AMTC will import fuel in bulk and the destinations of M/V SSR I2 may be known oniy upon loading of the fuel to the departing vessei, such bulk importation or direct

Storage tanks shall be subject to prior approval and regular monitoring by the BIR. subject to VAT effective zero rating. In both cases. however, the maintenance of these Otherwise. the ruic in the immediately preceding paragraph will apply. If AMTC is maintaining dedicated tanks for the storage of fuel to be used by M/V SSR releasc from BOC custody/supplier oil company. the importation of these fuel by the sea transport operator shall be exempt from VAT. whiic its local purchases will be petroleum products will be detivered directly to these dedicated storage tanks upon 12 exclusively for its international voyage. and the imported or locally purchased

3) The gross receipts of AMTC arising from the entire journey of M/V SSR 12 from Kudos Port in Sasa, Davao City to Bitung. Indonesia is subject to zero percent (0%) VAT

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Asian Marine Transport Corp. (Internutional Shipping) Page 4 Qf 4

However, if before proceeding to the port in Bitung. Indonesia M/V SSR 12 loads cargoes from Kudos Port and unloads them in General Santos International Port. the gross receipts therefrom (domestic port to another domcstic port) shall be subject to 12% VAT.

This ruling is issued on the basis of the facts as represented. However. if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned.

Very truly yours.

M

Commissioner of Internal Revenue CAESAR R. DULAY

K-1-MCUS mcust\ Asian Marme Transport Corp. 010053