BIR Ruling

August 8, 1975 Messrs. Angara, Abello, Concepcion, Regala & Cruz Law Offices MCC P.C. Box 1425 Makati, Rizal Attention: Mr . Pablo de Borja Gentlemen : This refers to your letter dated June 17, 1975 requesting opinion regarding the tax implications of the intended transaction of one of your clients, which is the purchase of Butel Exchange from the Bureau of Telecommunications. It is stated in your letter that these Butel Exchange were imported into the Philippines more than 4 to 5 years ago, for its own use, by the Bureau of Telecommunications which is a government agency and therefore generally a tax-exempt entity. aisa dc With the foregoing as a premise, you now pose the following queries: "1. What taxes would our client be subject to as a result of its purchase of Butel Exchanges from the Bureau of Telecommunications?" "2. It is liable to pay compensating tax under Section 190 of the National Internal Revenue Code?" In reply, I have the honor to inform you that if the Butel Exchanges were imported tax-free by the Bureau of Telecommunications, then, their subsequent transfer to your client, a non-exempt person, will make your client the importer thereof, in which case, your client shall be liable to the compensating tax due thereon, if the said Butel Exchanges will be for the personal use of your client and not for sale, barter, or exchange. However, if your client intends to re-sell the articles in question after purchase from the Bureau of Telecommunications, then the advance sales tax imposed by Section 183(b) in relation to Section 186 of the Tax Code shall be collected from your client. Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue TAN 1182-568-4