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TOPIC:VAT

Tax Credit Method

Destination Principle

CASE: CIR vs. Toshiba Information Eqipment !Phils"# Inc.

466 SCRA 211, August 9, 2005

$ACT%&

1. Respondent Toshiba: organize an esta!"is#e as a o$esti%%or&oration, u"' registere (it# t#e SEC, (it# t#e &ri$ar' &ur&oseo) engaging in t#e !usiness o) $anu)a%turing an e*&orting o)e"e%tri%a" an $e%#ani%a" $a%#iner', e+ui&$ent, s'ste$s,a%%essories, &arts, %o$&onents, $ateria"s an goos o) a"" ins,in%"uing, (it#out "i$itation, to t#ose re"ating to o))i%e auto$ationan in)or$ation te%#no"og', an a"" t'&es o) %o$&uter #ar(are anso)t(are -//, C/RO an &ersona" %o$&uter &rinte %ir%uit

!oars A"so registere (it# t#e P#i"i&&ine E%ono$i% 3one Aut#orit'

-PE3A as an ECO3OE E*&ort Enter&rise, (it# &rin%i&a"o))i%e in aguna Te%#no&ar, inan, aguna

It registere (it# t#e IR as a 7AT ta*&a'er an a (it##o"ingagent

8i"e its 7AT returns )or t#e 1stan 2n+uarters o) ta*a!"e 'ear1996, re&orting input VAT in t#e a$ount o) P1 an P5

-tota" o) P1; T#e sai in&ut 7AT (as )ro$ itspurchases of capital goods and

services which remained unutilizedsin%e it #a not 'et engagein an' !usiness a%ti

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RATI&

An EC/0E enterprise is a VAT1exempt entit2. %ales of *oods#

properties# and services b2 persons from the Cstoms Territor2 to

EC/0E enterprises shall be sb3ect to VAT at 4ero percent !56"

1 Petitioner CIR )ai"e to i))erentiate !et(een 7ATe*e$&ttransa%tions )ro$ 7ATe*e$&t entities

1 Se%tion 10-+ o) t#e Ta* Coe o) 19@@, as a$ene, re"ie u&on !'&etitioner CIR, re"ates to 7ATe*e$&t transa%tions sin%e su%#

transa%tions are not su!e%t to 7AT, t#e se""ers %annot &ass on an'out&ut 7AT to t#e &ur%#asers o) goos, &ro&erties, or ser

Philippine VAT s2stem adheres to the Cross ?order Doctrine

1 o 7AT s#a"" !e i$&ose to )or$ &art o) t#e %ost o) goosestine )or %onsu$&tion outsie o) t#e territoria" !orer o)t#e ta*ing aut#orit'

1 en%e, a%tua" e*&ort o) goos an ser

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)ro$ 7AT an t#e su&&"ier s#a"" not !e a!"e to %"ai$%reit=re)un o) its in&ut 7AT

o(e