Only outbound transshipment of goods or cargoes benefit from zero percent VAT.
In VAT ruling no. 062-98 dated December 15, 1998, it was held that:
" The anus taxation under our VAT system is in that country where goods, property or services are destined, used or consumed. This is the reason why, under our VAT Law, goods, property or services destined to be used or consumed in the Philippines are subject to the 10% VAT while those destined, used or consumed abroad are subject to zero percent VAT.
"Thus, unless otherwise expressly provided for by law, the sale of services, such as those rendered to vessels engaged exclusively in the international shipping business may be treated as qualified for the zero percent VAT, provided the use or benefit derived from such services crosses Philippine territory in accordance with the Cross Border Doctrine, which is the underlying principle of our VAT system.
"For this reason, this Office is amenable to apply the zero percent VAT on the transshipment services rendered by domestic carriers to international carriers, with respect to the transshipment of goods or cargoes from a Philippine port to a foreign port of entry (i.e. zero percent VAT only for outbound transshipment of goods or cargoes). Conversely, inbound transshipment of goods or cargoes shall be subject to the 10% VAT, pursuant to Section 108(a) of the Tax Code of 1997."
(VAT ruling No. 46-2001 dated July 16, 2001. This ruling is issued on the basis of represented facts. However, if upon investigations, it will be disclosed that the facts are different, then this ruling shall be considered null and void).