BIR Ruling [DA-497-04]

September 20, 2004 BIR RULING [DA-497-04] Section 101 (A) (2) BIR Ruling No. VAT-057-98 & DA-184-97 Hon. Edgar M. Chatto G/F, Rm. N-102 House of Representatives Quezon City Gentlemen : This refers to your letter dated September 3, 2004 requesting for a ruling on whether the importation of computers in favor of a government school is exempt from value-added tax. It is represented that the Tanglin Trust School ("donor") is an educational institution in the Republic of Singapore with mailing address at Portsdown Road, Singapore 139299; that it has recently upgraded its ICT suites for which reason, it has now available 3-year old computers which are still in good working condition; that on August 12, 2004, in Singapore, the donor-school donated thirty one (31) desk top computers more particularly described as follows: Acer Power 4400 and 4100 Celeron 333 Mhz (CPU) With 4.3 GB IDE Hard Disk Drive 32 MB SDRAM 40x CD-ROM 15" Acer monitor Keyboard Mouse to the Special Program for the Arts of Dr. Cecilio Putong National High School ("donee"), a Department of Education-accredited public secondary school in Tagbilaran City, Bohol; and that on August 18, 2004, Ms. Crestianita V. Caga and Ms. Milagros D. Fuderanan executed on behalf of the donee, an Affidavit of Acceptance in Tagbilaran City, Bohol. In reply, please be informed that Section 4.101-1 of Revenue Regulations No. 7-95 provides that "the VAT is imposed on goods and properties brought into the Philippines, whether for use in business or not. The tax shall be based on the total value, used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, if any, and other charges prior to the release of the goods or properties from customs custody such as postage, commissions, and other similar charges. . . (VAT Ruling No. 057-98 dated November 18, 1998). Accordingly, the subject importation is subject to the 10% VAT pursuant to Section 107(A) of the Tax Code of 1997 (BIR Ruling No. DA-184-97 dated April 17, 1997). However, since the donee is a government institution, the aforesaid donation is exempt from the payment of donor's tax pursuant to Section 101(A)(2) of the Tax Code of 1997 but subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997 (BIR Ruling No. 108-94 dated May 30, 1994 and BIR Ruling No. DA-28-98 dated January 29, 1998). HcDaAI 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group