BIR Ruling [DA-154-02]

September 11, 2002 BIR RULING [DA-154-02] Technical Education & Skills Dev't. Authority (TESDA) Region X Corner P. Chavez & Jupiter Sts., Macasandig Cagayan de Oro City Attention: Silvano B. Maranga Regional Director Gentlemen : This refers to your letter dated April 1, 2002, requesting exemption from the payment of donor's tax on the donation of a motor vehicle by the Australian Embassy, thru Mr. Peter Smith to the Technical Education & Skills Dev't. Authority (TESDA) Region X, Cagayan de Oro City Regional Office. It appears that the Government of Australia, represented by Mr. Peter Smith, Counsellor (Development Cooperation), Australian Embassy, is the legal owner of one (1) unit, Toyota Tamaraw, with motor No. 2L-9604558, serial/chassis No. LF80-8004787, diesel fed, registered with the Land Transportation Office and with plate No. OEV-21604; that the title of the property will pass from the Australian Embassy to the Technical Education & Skills Development Authority (TESDA), Region X (Cagayan de Oro Branch) in recognition of the implementation of the Philippines-Australia Quality Technical Vocational Education & Training Project (PAQTVET), for the use by the said agency; and that the donee assumes the related costs resulting from the transfer of ownership of said vehicle from the Australian Embassy to TESDA Region X, Cagayan de Oro City. It also appears that the motor vehicle in question is one of the three (3) units of Tamaraw Revo which was purchased last January 2000 by the Australian Embassy/Preparatory Program to Philippines from Toyota Otis, Inc. Per Certification of Toyota Otis, Inc. the three (3) units Toyota Tamaraw cost P1,653,900.00, inclusive of VAT and for which it paid the output VAT of P150,354.55 which was included in its monthly VAT return for the month of July 2000 which was filed in August 2000. In reply, please be informed that inasmuch as the donee is an agency of the National Government created under Republic Act No. 7796 (Technical Education and Skills Development Act of 1994) tasked to promote and strengthen the quality of technical education and skills development program to attain international competitiveness, among other things, the aforesaid donation is exempt from the payment of donor's tax pursuant to Section 101(A)(2) of the Tax Code of 1997. Moreover, since the transfer of the said motor vehicle was not made in the course of trade or business, the Australian Embassy is not subject to the 10% VAT under Section 106(A) of the 1997 Tax Code. It is also worthwhile mentioning that Section 131(A) of the 1997 Tax Code is likewise inapplicable herein since the Toyota Tamaraw in question is not imported and the Transferor (Australian Embassy) and the Transferee (TESDA) are both tax-exempt entities. Hence, no ad valorem tax is payable by TESDA on the subsequent transfer of the Toyota Tamaraw by the Australian Embassy. Finally, the Deed of Donation is not subject to documentary stamp tax. However, the acknowledgment on said deed is subject to documentary stamp tax of P15.00 on certification under Section 188 of the Tax Code of 1997. ( BIR Ruling DA-267-2000 dated Jan. 23, 2000 ). 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 null and void. Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service