BIR Ruling

May 20, 1970 Civil Aeronautics Administration Manila International Airport Pasay City Attention: Mr . Alfredo Sanedrin Sr . Executive Assistant Gentlemen : This refers to your letter dated May 15, 1970 requesting information, among others, on the "pertinent tax exemption provision enjoyed by local and foreign airlines" on aviation gasoline, fuel and oil. In reply, I have the honor to inform you that at present locally manufactured aviation gasoline and other fuel oils used in domestic flights by local airlines are not exempted from the payment of the specific tax. However, in view of the fact that said local airlines are franchise holders paying certain percentage of their gross income in lieu of all other taxes, they have requested that the said locally manufactured gasoline and other fuel oil used in domestic flights be exempted from the specific taxes. This request is now pending resolution by the Secretary of Finance. On the other hand, importations by said franchise holders of aviation gasoline and other fuel oils for use in their domestic operations are exempt from the specific tax in accordance with the ruling of the Secretary of Finance on the matter. As regards, aviation gasoline and other fuel oils used by the local and foreign airline companies in international flight, the same are not subject to the specific tax considering that said articles are not consumed in the Philippines. Under Section 123 of the Tax Code, specific tax applies, among others, only to things manufactured or produced in the Philippines for domestic sale or consumption. (See BIR Rulings Nos. 65-079 dated July 12, 1965, and 65-116 dated October 5, 1965). Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue