Canon is a designer of software and hardware products, which caters only to foreign-based clients, particularly those based in Japan. All of its revenues are in foreign currency, which is regularly remitted by its clients. In the year 2000, it generated more than P128 million in foreign currency earnings.
RMO No.9-2000 covers only VAT-registered suppliers of manufacturer-exporters registered with the Board of Investments. Section 3 of RMO No. 9-2000 states: "The buyer must be a BoI-registered manufacturer-producer whose products are 100% exported. For this purpose, a certification to this effect must be issued by the BoI and which certification shall be good for one year, unless subsequently re-issued by the BoI."
Since Canon is a service provider, not a manufacturer, its suppliers cannot qualify for VAT zero rating on their sales to Canon.
(VAT ruling No. 075-2001 dated Oct. 17, 2001 was issued on the basis of represented facts. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void).