BIR Ruling [DA-230-04]

May 5, 2004 BIR RULING [DA-230-04] R.A. 7796 DA-153-2002 Technical Education & Skills Dev't. Authority East Service Road, South Luzon Expressway Fort Bonifacio, Taguig, Metro Manila Attention: Ms. Alcestis M. Guiang Director General Gentlemen : This refers to your letter dated April 22, 2004 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 and Skills Development Authority (TESDA) Taguig, Metro Manila. 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 Revo GL, with Motor No. 7K-0321825, Serial/Chassis No. KF80-8014725, registered with the Land Transportation Office with plate No. OEV21613; that the title of the property will pass from the Australian Embassy to the Technical Education and Skills Development Authority (TESDA), Taguig, Metro Manila, in recognition of the implementation of the Philippine-Australian Quality Technical Vocational Education and Training Project (PAQTVET) for the use of 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-Taguig, Metro Manila. 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 Acts 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 Tax Code of 1997. It is also worthwhile mentioning that Section 131(A) of the Tax Code of 1997 is likewise inapplicable herein since 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 acknowledgement 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 No. 153-2003 dated September 11, 2002 ) SAaTHc This ruling is being issued on then 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