BIR Ruling

September 15, 1969 M. C. Engineering, Inc. 116 Virginia, Cubao Quezon City Gentlemen : This refers to your letter dated September 10, 1969 requesting that your receipts derived from the following contracts be exempted from the 3% contractor's tax, to wit: Contract MDAP #10-65, Photo Laboratories, Camp Aguinaldo, Quezon City Contract MDAP #9-65, PC Facilities, Pili, Camarines Norte Contract MDAP #7-66, Camp Aquino, San Miguel, Tarlac Contract MDAP #23-66, LOX Plant, Basa Air Base Contract MDAP #2-66, Project "Bamboo", Firing in Butt, Basa Air Base Contract MDAP #6-67, Base Operations and Control Tower, Basa Air Base Contract MDAP #14-67, Signal Facilities, Camp Olivas Contract MDAP #11-66, Camp Capinpin, Tanay, Rizal Contract MDAP #1-67, HQ and Operations Bldg., Motor Pool, Camp Aguinaldo. In reply, I have the honor to inform you that it appearing that the foregoing projects were covered by MDAP Contracts, receipts derived thereof are exempt from the contractor's tax in accordance with Section 6 of the Mutual Defense Agreement Pact of April 27, 1955 which provides as follows: "6. The Philippine Government agrees that no internal revenue tax of any kind or description, except income taxes, shall be levied on any materials, equipment and supplies and/or services which may by purchased or otherwise acquired in connection with the terms of this agreement on an approved projects as referred to herein, which materials, equipment, supplies and/or services are required solely for such projects." Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue