BIR Ruling

October 13, 1969 The President Regal Builders, Inc. Ben-Ler Bldg. 368 Quezon Blvd. Ext. Quezon City S i r : This refers to your letter of even date requesting opinion as to whether or not your receipts derived from the construction of the PC Provincial Headquarters with utilities at Dipolog, Zamboanga del Norte under MDAP Contract No. 2-68 is subject to the 3% contractor's tax under Section 119 of the Tax Code. In reply, I have the honor to inform you that it appearing that the aforesaid project was covered by an MDAP Contract which was funded by AID-NEC funds, receipts derived therefrom is 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 be purchased or otherwise acquired in connection with the terms of this Agreement on an approved project as referred to herein, which materials, equipment, supplies and/or services are required solely for such projects." prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue