Meaning of “accounted for in accordance with the rules and regulations of the BSP” in sales of services to non-residents subject to 0% VAT

[Originally posted on 07Dec2012]

[Last updated on 13Nov2023]

Under Section 108(B)(1) and (2) of the Tax Code, as implemented by RR No. 16-2005 as amended, the following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) VAT rate:

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP).

(2) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). 

So what exactly is “accounted for in accordance with the rules and regulations of the BSP” in relation to the VAT zero-rating on certain sales of services to non-residents?