BIR Ruling [DA-045-06]

February 14, 2006 BIR RULING [DA-045-06] Section 106 (2) (c); BIR Ruling No. 111-97 Policy, Training and Technical Assistance Facility Project Management Office Unit 1007, The Orient Square Building Emerald Avenue, Ortigas Center Pasig City Attention: Ms. Nide Marie S. Bombay Project Director Gentlemen : This refers to your letter dated April 7, 2005 requesting for an extension of the tax exemption this Office granted to the Project Management Office (PMO) of the Policy, Training and Technical Assistance Facility (PTTAF) dated March 16, 1997, which expired in the year 2004. It is represented that PTTAF is a bilateral project funded by the Canadian International Development Agency (CIDA) with the goal of promoting responsible governance; that as a result of your successful implementation of the first phase (1992-1998), CIDA approved PTTAF Phase II for another six years (1999-2004) with Cdn$10 million grant to further expand assistance to reform programs for the Government of the Philippines; that PTTAF is being extended for another year (2005-2006) by CIDA in order to enhance sustainability measures and complete its key role in government; that request for PTTAF extension and Confirmation/Endorsement letter from ADG Margarita Songco of NEDA dated March 26, 2004 is attached to your letter; that to record the understanding concerning the development assistance, a Memorandum of Understanding (MOU) was executed and entered into by the governments of Canada and Philippines last November 6, 1998; that an Exchange of Letters amending the Memorandum of Understanding was signed on July 25, 2005 to reflect the increase of Cdn$1 Million in Canada's contribution and an extension of duration from September 30, 2005 to June 30, 2006; and that under Section 5.02 of the MOU, the PMO of PTTAF is exempted from payment of all taxes on all goods and services acquired or purchased in relation to the execution of the project. In reply, please be informed that the effectivity of BIR Ruling No. 111-97 dated October 23, 1997 is extended until June 30, 2006 to cover the MOU entered into between the governments of Canada and Philippines on PTTAF-Phase II. Such being the case, the money to be paid for rental services rendered to the local executing agency or implementing agent of the PTTAF Project during the extended period, which, in all probability, will be taken from the said restricted contribution of Canada, shall be effectively subject to a zero-rate (0%) VAT pursuant to Section 106(2)(c) of the Tax Code of 1997. TCASIH 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, (SGD.) JOSE MARIO C. BUAG OIC-Commissioner of Internal Revenue