TAX2.7 Marcopper Mining Corp.

v Commissioner

FACTS: Petitioner, a BOI-registered enterprise, produces and exports copper concentrates subject to a zero-rate VAT.
Petitioner sold its copper concentrate to Philippine Association of Smelters and Refiners, Inc. (PASAR), also a BOI-
registered export producer. Petitioner now seeks for the refund of input VAT attributable to the local sales of PASAR
claiming that the sales to PASAR are treated as export sales thus entitling it to zero rate output VAT and to the refund of
input taxes for such zero rated sale of goods. However, CIR disallowed the claim for a tax credit.

ISSUE: Whether petitioner is entitled to tax credit.

RULING: Yes. To avail of zero-rating of input taxes, the only requirement to be complied is for it to sell its raw materials
to export-oriented BOI-registered enterprises whose export sales exceed 70% of total annual production. The law does not
require a 100% export sales. Hence, local sales in excess of the 70% requirement may be allowed, contrary to the
contention of the respondent. Likewise, petitioner, a BOI-registered enterprise, sold its copper concentrate to PASAR,
also a BOI-registered export producer. These copper concentrates have been used as raw materials in the production of
goods for export by PASAR, which actually exported 75.93% of its manufactured goods.