Section 7Sec./Art. 7

Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -

(A) Rate and Base of Tax. - x x x

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:

(1) x x x;

(2) x x x;

(3) x x x;

(4) x x x;

(5) Services performed for an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year: Provided, That such services are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the DTI shall determine compliance with the aforementioned threshold. Any export-oriented enterprise that fails to meet the threshold shall be disqualified from availing of VAT zero-rating in the immediately succeeding year: Provided, finally, That input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer.

For this purpose, 'directly attributable' shall follow the same definition under Section 106 of this Code.

(6) x x x;

(7) x x x; and

(8) Sales subject to zero percent (0%) VAT under special laws.

The DOF shall establish a VAT refund center in the BIR and in the BOC that will handle the electronic processing and granting of cash refunds of creditable input tax.

x x x."