BIR Ruling [DA-304-00]

August 14, 2000 BIR RULING [DA-304-00] 107 (A) DA-628-99 DA-304-2000 University of the Philippines Diliman, Quezon City Attention: Mr . Rafael A . Rodriguez Vice President for Development Gentlemen : This refers to your letter dated January 17, 2000 requesting for exemption from all customs duties and taxes of 15 SPARC classic workstations, 15 Sun computer monitors, 15 keyboards, 15 "mouse" units and one fax modem which are being donated to the University of the Philippines by the Massachusetts Institute of Technology. aTEADI In reply, please be informed that in this jurisdiction, tax exemptions are construed in strictissimi juris against the taxpayer. Thus, a taxpayer who claims tax exemption must be able to justify his claim by the clearest grant of organic law or statute. In the instant case, the donation of the Massachusetts Institute of Technology partakes the nature of an importation. In this connection, it is well settled in Section 107(A) of the Tax Code of 1997 that: "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." Regrettably, the provisions on VAT exemptions under Section 109 of the Code did not include exemption of transactions similar to the case at hand. Thus, this Office is unable to grant your request for lack of legal basis. The above notwithstanding, said importation is exempt from the donor's tax since it is donated to the University of the Philippines, an entity created by the National Government which is not conducted for profit, pursuant to Section 101(B)(1) of the Tax Code of 1997. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group