BIR Ruling

August 19, 1969 Mr. Florentino M. Morales 740 Moriones St., Tondo Manila S i r : This refers to your letter dated June 30, 1969 requesting information as to whether or not receipts derived by a Filipino contractor in the different U.S. military bases here in the Philippines is subject to the 3% contractor's tax and whether importations of materials to be used in construction projects in said military bases are likewise subject to tax. In reply, I have the honor to inform you that receipts derived by a Filipino contractor from his contracts with the U.S. military bases on construction works for the operation, maintenance and defense of the bases is exempt from the contractor's tax pursuant to the U.S.-P.I. Military Bases Agreement as supplemented by the exchange of notes between the Philippines and U.S. Governments on December 29, 1952. (See BIR Rulings Nos. 144, s. 1959; 3 s. 1961; Araneta vs. The Manila Pencil Co. G.R. No. L-8182, June 29, 1957). With regard to imported materials to be used in construction projects in said military bases, this Office will issue corresponding authority to release such imported materials free from taxes from Customs custody after all the necessary documents are submitted pursuant to the note of the Department of Foreign Affairs to the U.S. Embassy dated February 3, 1953. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue