BIR Ruling [DA-157-05]

April 14, 2005 BIR RULING [DA-157-05] 107; 078-86 Mr. Erwin C. Ocampo 204 C.M. Recto Street Brgy. Addition Hills San Juan, Metro Manila S i r : This has reference to your letter dated December 16, 2004, requesting a ruling that the items you exported and was shipped back to the Philippines is not subject to value-added tax on importation. It is represented that on July 21, 2004, you shipped a package to Rome, Italy under FEDEX Airway Bill No. 8477-8429-5030. The consignee of the package which contains used watch spare parts was Mr. Guillermo Tuazon. However, due to exorbitant customs tax, the consignee in Rome, Italy, refused to accept the package. Instead, Mr. Tuazon instructed the carrier to return the package to the port of origin and the same was shipped under FEDEX Airway Bill No. 6343-0262-6480 back to Manila. This time, the original shipper thus became the consignee. In reply, please be informed of the provision of Section 107(A) of the Tax Code of 1997 which states: "Sec. 107. Value-added Tax on Importation of Goods . (A) In General . There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, that where the customs duties are determined on the basis of the quantity or volume of the goods, the value added tax shall be based on the landed cost plus excise taxes, if any. EDSAac It is clear from the foregoing provision that generally, all importations are subject to value-added tax on importations. In your case, however, this Office believes that the aforementioned shipment is not subject to the value-added tax imposed under the Tax Code. The shipment in question is not an importation since the same was only shipped back to this country on account of its rejection by the consignee. ( BIR Ruling No. 078-86 dated September 17, 1986 ) 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group