ZERO RATED SALE OF GOODS

The following sales by vat-registered persons shall be subject to 0% vat under section
106 (A)(2)(a) of the tax code, as amended by RA No. 10963, otherwise known as the TRAIN law.

EXPORT SALES

A. Actual Export and Deemed Export Sales:

(1) Sale and actual shipment of goods from the Philippines to foreign country, regardless of
any shipping agreement that may be agreed upon that may affect or decide the transfer of
ownership of the products so exported and paid for in appropriate foreign currency or its
equivalent in goods or services, and accounted for in compliance with Bangko Sentral ng
Pilipinas rules and regulations (BSP).

B. Effectively Zero Related Sales

Sales to entities exempt under a special law or under international agreements to which
the Philippines is a signatory effectively subjects such sales to zero rates.

It shall refer to local sale of goods and properties by a vat registered person or entity
who was granted indirect tax exemption under special laws or international agreement

STATUS QUO ON VAT ZERO – RATING OF SALES TO PEZA ENTITIES

DOF memorandum circular No. 2018-003 declared “status quo “on vat zero rating
incentives on sale of goods/services to separate customs territories. It further provides that
section 8 of the PEZA law, which provides that especial economic zones are to be operated and
managed as a separate custom territory, was not amended or repealed by TRAIN law.
Consequentially, until a law or revenue regulation is passed or issued contrary to or
incompatible with the pronouncement by the DOF, the vat zero-rating incentive being enjoyed
by PEZA locators or entities shall remain in full force and effect.