BIR Ruling

December 7, 1976 Mrs. Ana Vda. De Sopoco 7030 D. Wilson St. Makati, Rizal M a d a m : This refers to your letter dated September 2, 1976 requesting exemption from the payment of compensating tax on the purchase of a Volkswagen Microbus Model 1960 which was originally imported tax-free by the Servants of Saint Joseph, a religious corporation of 6321 Estrella Street, Makati, Rizal. cd It is represented that the abovementioned motor vehicle is already old and dilapidated due to the long years of use by the said religious organization. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. Pursuant to Section 190 of the Tax Code, as amended by Presidential Decree No. 69, tax free articles brought or imported into the Philippines by persons, entities or agencies, exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt private persons or entities shall be subject to the payment of compensating tax. Accordingly, abovementioned motor vehicle is subject to the payment of compensating tax. However, considering that the aforesaid motor vehicle which will be sold to you is sixteen (16) years old, it is entitled to depreciation allowance of 90% for purposes of the compensating tax, pursuant to Department Order No. 13-62 of the Department of Finance, dated April 18, 1962 which provides in part, as follows: "xxx xxx xxx "In ascertaining, estimating and determining the dutiable value of cars of US brands and manufacture, appraisers may take into account, but shall not be limited to, the retail factory price published in the Red or Blue Book. "2. The published retail factory price as published in the Red and Blue Book shall be entitled to depreciation allowance for the applicable model year of all makes of cars regardless of country where manufactured, in accordance with the following table: "Current Year Models 10% One Year Old Models 25% Two Year Old Models 40% Three Year Old Models 50% Four Year Old Models 60% Five Year Old Models 70% Six Year Old Models 80% All Old Models 90% "xxx xxx xxx" It should be understood that pursuant to Section 190 of the Tax Code, as amended, the purchaser is considered the importer liable to the payment of the compensating tax due thereon. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."