BIR Ruling

June 26, 1969 MEMORANDUM for His Excellency The President of the Philippines This refers to the proposed Administrative Order directing the Secretary of Finance to exempt the Southeast Asian Regional Center for Graduate Study and Research In Agriculture (SEARCA) from Philippine taxes, specifically broken down as follows: lexlib (1) Exempting the SEARCA from income, franchise, specific, percentage, real property and all other taxes, duties and fees on equipment and other materials procured by or provided for the Regional Center for the construction of its buildings and structures, for its scientific, educational and training purposes and for its operation and maintenance; (2) Exemption from all taxes, duties and fees on goods brought in or imported for the personal use of foreign personnel or staff whose services to the Regional Center are paid for by a foreign government, entity or individual assisting or financing the activities of the Regional Center; (3) Exemption from the income tax of salaries and stipends received solely and by reason of services under the Regional Center by non-filipino citizens serving on the staff of the Regional Center who are participating in its program and whose services and participation are paid for by the Regional Center or any foreign government, entity or individual assisting or financing the activities of the Center; (4) Exemption of all gifts, bequests, donations and contributions which may be received by the Regional Center from any source whatsoever or which may be granted by the Regional Center to any individual or non-profit organization for educational or scientific purposes from the donors' and donees' gift taxes. (5) Allowing all such gifts, contributions and donations as deduction from the gross income of the donor. The exemption of the SEARCA from income tax and gift taxes may be legally granted under Sections 27(e), 109, 110(a) and 112(a)(3) of the Tax Code. The exemption, however, from the franchise, specific, percentage, and real property taxes may not be legally granted under the provisions of the National Internal Revenue Code. The exemption from tax of equipment and materials for the use of the Center may not also be available under the Tax Code. However, under the theory that SEARCA may qualify as an agency of the Republic of the Philippines, being the host government, exemption may be granted subject to the provisions of the Tariff and Customs Code. Exemption of goods brought in or imported by the personnel of the Center cannot be granted under the provisions of the Tax Code. The exemption from income tax of the salaries and stipends received by non-Filipino citizens cannot also be granted under the Tax Code. The deduction allowance of donations, gifts or contributions to the Center from the taxable income of the donor cannot also be granted under the Tax Code. This Office believes that legislation is necessary to secure the exemptions being sought which are not available under the Tax Code and in order to forestall doubt that might arise as regards those which may be available under the Tax Code, all exemptions being sought may just as well be included in the bill. Respectfully submitted: (SGD.) MISAEL P. VERA Commissioner of Internal Revenue