BIR Ruling [DA-257-00]

June 5, 2000 BIR RULING [DA-257-00] 101 (A) (2), 107 (A) DA-257-2000 Philippine Center on Transnational Crime Camp Crame, Quezon City Attention: Leandro R. Mendoza Police Director Executive Director PCTC Gentlemen : This refers to your letter dated April 10, 2000 requesting for exemption from the payment of donor's tax on the intended donation by the US Secret Service, Manila Office of one of their tax free service vehicles described as Mitsubishi Galant with diplomatic plate #16987 to the Philippine Center on Transnational Crime (PCTC), a government agency under the Office of the President; and that the said service car will be used by the PCTC in order to strengthen its research capability against transnational organized crime operating in the country. In reply, please be informed that pursuant to Section 101(A)(2) of the Tax Code of 1997, gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or for any political subdivision of the said Government is exempt from donor's tax. Such being the case, the intended donation by the US Secret Service, Manila Office of a Mitsubishi Galant with diplomatic plate #16987 to the PCTC is exempt from donor's tax pursuant to the aforecited provision of the Tax Code. However, if the subject tax-free motor vehicle was imported from abroad by the U.S. Secret Service, the transferee-donee shall be considered importer thereof who shall be liable for the VAT on such importation and the tax due on such importation shall constitute a lien on the goods, superior to all charges or liens on the subject motor vehicle, irrespective of the possessor thereof. The VAT shall be equivalent to 10% of the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, and other charges pursuant to Section 107 of the Tax Code of 1997. This ruling is 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, Commissioner of Internal Revenue By: (SGD.) ESTELITA C. AGUIRRE Deputy Commissioner (Resource Management Group Officer-In-Charge)