BIR Ruling

December 8, 1972 The Chief, Intelligence Unit B.I.R., Manila S i r : This refers to your Memorandum dated November 21, 1972 requesting resolution of the following questions: "(a) Are the purchases from base commissaries made by veterans of the U.S. Armed Forces, allegedly for their personal use or consumption, who are holders of PX cards, subject to compensating tax when brought out of the bases. "(b) Are purchases made by dependents, also holders of PX cards, of Filipino personnel in the active service of the U.S. Armed Forces, purportedly for their personal use or consumption, subject to compensating taxes when brought out of the bases by such dependents." cdti In reply, please be informed that Article XVIII of the U.S.-P.I. Military Bases Agreement provides as follows: "1. It is mutually agreed that the United States shall have the right to establish on bases, free of all licenses; fees; sales, excise or other taxes, or imposts; Government agencies, including concessions such as sales commissaries and post exchanges, messes and social clubs, for the exclusive use of the United States military forces authorized civilian personnel and their families. The merchandise or services sold or dispensed by such agencies shall be free of all taxes, duties and inspection by the Philippine authorities. Administrative measures shall be taken by the appropriate authorities of the United States to prevent the resale of goods which are sold under the provisions of this Article to persons not entitled to buy goods at such agencies, and generally, to prevent abuses of the privileges granted under this Article. There shall be cooperation between such authorities and the Philippines to this end." From the foregoing, it is clear that veterans or their dependents are not covered by the exemption. Veterans, upon their retirement from active military service cease to be members of the U.S. Military forces within the purview of the aforequoted provision of the U.S.-P.I. Military Bases Agreement. Accordingly, all goods purchased by them and their dependents from base post exchanges or commissaries are subject to the corresponding taxes when brought out of the bases. However, purchases made by Filipino personnel in the active service of the U.S. Armed Forces including their dependents, from post exchanges and commissaries in the bases for their personal use and consumption, are exempt from internal revenue taxes under the provisions of the aforequoted provision of the U.S.-P.I. Military Bases Agreement. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue