BIR Ruling [DA-297-04]

May 31, 2004 BIR RULING [DA-297-04] Hon. Ferdinand R. Marcos, Jr. Provincial Governor of Ilocos Norte Laoag City S i r : This refers to your letter dated March 3, 2001, which was indorsed to this Office by the Assistant Regional Director of BIR Region No. 1, Calasiao, Pangasinan, relative to your request for the issuance of a tax exemption certificate on the importation by the Provincial Government of Ilocos Norte (referred to as PGIN in your letter) of a flu-curing barn from Canada. You state that the said flu-curing barn is owned and managed/operated solely by the PGIN in coordination with the National Tobacco Administration for research and development and not for commercial purposes. In reply, we regret to deny your request for lack of legal basis. The statutory exemption of the PGIN under Section 109 of R.A. No. 8435 otherwise known as the "Agriculture and Fisheries Modernization Act of 1997", covers only tariff and customs duties for the importation of all types of agriculture and fisheries inputs, equipment and machinery but does not include exemption from VAT. The transaction which are exempt from VAT are enumerated in Section 109 of the 1997 Tax Code. Since the importation of a flu-curing barn by a local government unit, like the PGIN, is not among those included in the enumeration, no tax exemption can be granted by this Office. Tax exemptions are strictly construed and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. ( Collector vs. Manila Jockey Club, Inc ., 98 Phil. 670). EaSCAH Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue