SERVICES 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 may be subject to zero percent value-added tax (VAT), provided that the consideration for the services is paid for in acceptable foreign currency in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), pursuant to Section 108(B)(2) of the National Internal Revenue Code, as amended (the Tax Code).

To be eligible for the VAT zero-rating, the following elements must be present – (1) the recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines; or is a nonresident person not engaged in business who is outside the Philippines when the services were performed; (2) the payment for such services were made in foreign currency accounted for in accordance with BSP rules; (3) the services fall under any of the categories under Section 108 (B) (2), or simply, the services rendered should be other than 'processing, manufacturing or repacking goods;' and (4) the services must be performed in the Philippines by a VAT-registered person.