Philippines: Foreign shipping companies entitled to VAT zero-rating (Supreme Court decision)
A Supreme Court decision concerning whether foreign shipping companies were entitled to VAT zero-rating.
Foreign shipping companies entitled to VAT zero-rating
The Supreme Court held that fees received by the taxpayer from foreign shipping companies for services related to manning vessels were subject to 0% value added tax (VAT).
The tax authority argued that the taxpayer’s activities resulted in the shipping companies being engaged in business in the Philippines, and thus that the fees paid by the companies to the taxpayer would not be entitled to VAT zero-rating.
The court rejected the tax authority’s position, finding that the shipping companies had no command over the taxpayer in the operation of its business, even in the conduct of its recruitment process, and thus its activities could not be attributed to the companies.
Read a July 2024 report prepared by the KPMG member firm in the Philippines
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