BIR Ruling [DA-008-05]

January 11, 2005 BIR RULING [DA-008-05] Section E, RA 8756; DA-109-2003 Lumague & Associates Certified Public Accountants 6F, 111 Paseo de Roxas Building Legaspi Village, Makati City Attention: Mr. Renato D. Lumague Authorized Representative Gentlemen : This refers to your letter dated October 7, 2004 requesting in behalf of your client, BRUNEL TECHNICAL SERVICES OFFSHORE PHILIPPINES, INC. (BRUNEL) for a tax exemption as a regional area headquarters. It is represented that your client holds office at the 2nd Floor, BCC Building, 5046 P. Burgos St., Poblacion, Makati City; that BRUNEL is a regional area headquarters established in the Philippines under Executive Order No. 226 otherwise known as the Investments Code of 1987 as amended by Republic Act No. 8756; that the tax exemption you are requesting, particularly the VAT exemption will be used by BRUNEL in purchasing a motor vehicle for its supervisory communications and coordinating operations in the Philippines; and that you attached pertinent documents for our reference. 2005cdtai In reply, please the informed that pursuant to paragraph (E) Section 14 the Rules and Regulations implementing Republic Act No. 8756, amending Executive Order No. 226, otherwise known as the Omnibus Investments Code provides that: "Section 14. Value-Added Tax. Regional or area headquarters shall be exempted from the value-added tax. The sale or lease of goods and property and the rendition of services to regional or area headquarters shall be subject to zero percent (10%) VAT rate as provided for in the National Internal Revenue Code, as amended." (Italics ours.) Since the BRUNEL has been granted tax exemption privileges based on its status as a regional or area headquarters by the Board of Investments, the sale of an automobile to it shall be subject to zero percent-rate (0%) VAT pursuant to paragraph (E) Section 14 the Rules and Regulations implementing Republic Act No. 8756. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group