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to see this picture. a. which goods are subsequently exported b. where the services are paid for in acceptable foreign currency c. accounted for in accordance with the rules and regulations of the BSP 2. services other than processing, manufacturing, or repacking a. rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed [CIR v. Busmeirter, et al, GR No. 153205 (2007) require performance of services to nonresident to qualify as zero-rated.] b. The consideration of which is paid for in acceptable foreign currency c. accounted for in accordance with the rules and regulations of the BSP 3. services rendered to persons or entities whose exemptions under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent rate 4. services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof shall not pertain to those made to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines (subject to 12% VAT) 5. services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of the total annual production 6. transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country. Gross receipts of international air carriers doing business in the Philippines and international sea carriers doing business in the Philippines are still liable to percentage tax 7. sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean

energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels. Zero rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power Effectively Zero-Rated Sale of Services: refer to the local sale of services by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws or international agreement (limited to 3, 4, 5) Concerned taxpayer must seek prior approval or prior confirmation from the appropriate offices to the BIR so that a transaction is qualified for effectively zero-rating Without an approved application for effective zero-rating, the transaction otherwise entitled to zero-rating shall be considered exempt SEC 109. VAT EXEMPT TRANSACTIONS Refer to the sale of goods or properties and/or services and the use or lease of properties that is not subject to VAT and the seller is not allowed any tax credit of VAT on purchases Exempt transactions: 1. sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials thereof Livestock: cows, bulls and calves, pigs, sheep, goats and rabbits Poultry: fowls, ducks, geese and turkey Does not include fighting cocks, race horses, zoo animals and other animals generally considered as pets Marine food products: fish and crustaceans, such as but not limited to, eels, trout, lobster, shrimps, prawns, oysters, mussels and clams Meat, fruit, vegetables and other agricultural and marine food products are considered in their original state even if hey undergone the simple process of preparation or preservation for the market : freezing, drying, salting, broiling, roasting, smoking or stripping, shrink wrappings in plastic, vacuum packing,