BIR Ruling

October 23, 1968 1st Indorsement Respectfully returned to the Commissioner of Internal Revenue, Manila. It is the opinion of this Department that the interpretation of that Office of the exemption provisions, Section 6(b), of Republic Act No. 4112 in conjunction with the pertinent provisions of Sections 183(b) and 190 of the Tax Code is erroneous and will work adversely against the efforts of that Bureau in the collection of taxes legally due the government. Section 6(b) of Republic Act No. 4112 does not support the contention of that Office to the effect that cars and personal and household effects brought into the country without the payment of duties and taxes by those entitled to tax-exemption privilege under the aforecited law may be sold with the buyers thereof immune from the specific requirements of Sections 183(b) and/or 190 of the Tax Code which provide "that in case of tax-free articles brought . . . into the Philippines by persons . . . exempt from tax which are subsequently sold . . . to non-exempt private persons . . ., the purchasers shall be considered the importers thereof". It must be understood that the exemption provided in Section 6(b) of Republic Act No; 4112 is confined only to returning officers and employees of the Philippine government on foreign assignment and the privilege expressly limited solely to exemption from the payment of customs duties and internal revenue taxes on the value of one motor car and to the aggregate assessed value not exceeding 50% of the total amount received by such returning officer and/or employee in salary and allowance during his latest assignment abroad but not to exceed four years, of household and personal effects brought back into the country by said officers and/or employees, no more and no less. That Office, in issuing its ruling of December 22, 1967 to the effect that Miss Liwayway B. Barican, Foreign Affairs Officer, who brought back a Fairlane Ford Car upon her reassignment to the home office free from duties and taxes under the provisions of Republic Act No 4112 may sell said car with the purchaser thereof not required to pay duties and taxes, does not only expand the privilege of those entitled to exemption under the provisions of Section 6(b) of Republic Act No. 4112 but also extend such privilege to persons entirely outside the scope of the law contrary to the provisions of Sections 183(b) and/or 190 of the Tax Code earlier cited. In view of the foregoing, it is hereby directed that the ruling of that Office of December 22, 1967 be recalled and immediate assessment and collection of the taxes and duties due on the sale of the car referred to therein effected. Likewise, similar steps be preferred against those who may have taken advantage of this particular ruling of that Bureau. It is requested that the projected assessments be made without further delay so as to give opportunity to the persons involved to resort to the proper Court if they are not in agreement herewith. It is likewise requested that this Department be informed of the action taken hereon as early as possible. (SGD.) JUAN PONCE ENRILE Acting Secretary