BIR Ruling [DA-565-06]

September 19, 2006 BIR RULING [DA-565-06] 101 (A) (2); DA-212-2004 GE Healthcare Technologies General Electric Philippines, Inc. 2291 Don Chino Roces Avenue Ext. 1231 Makati City Attention: Mr. Hermie Limbo Philippines Country Manager S.E. Asia Business Manager Gentlemen : This refers to your letter dated May 15, 2006 requesting exemption from the payment of donor's tax relative to the donation of GE Healthcare Ultrasound and BMD Southeast Asia of one (1) unit of Loqiq Book XP Colored Portable Ultrasound System with one probe (3C-RS) to the Anahawan District Hospital in Leyte. It appears that Anahawan District Hospital in Leyte was massively destroyed by a recent landslide; that the shipment will be coming from GE Medical Systems (CHINA) Co., Ltd. with office address at #19 Chanjiang Road, Wuxi National Hi-Tech Development Zone, Jiangsu, P.R.C.214028; and that attached with your request is the letter of Hon. Jose Ma. G. Minana, Municipal Mayor, Anahawan, Southern Leyte. In reply, please be informed that pursuant to Section 101 (B)(1) of the Tax Code of 1997, gifts made to or for the use of the National Government or any entity created by any of the said Government shall be exempt from donor's tax. Such being the case, and since the donee is a provincial government hospital, the aforementioned donation is exempt from the payment of donor's tax pursuant to Section 101(B)(1) of the Tax Code of 1997. However, Section 109 of the same Code which enumerates the transactions exempt from VAT does not include importation of articles/goods consigned to any political subdivisions of the Government. Accordingly, since the donated medical equipment will come from abroad, the importation thereof shall be subject to the 12% VAT based on the total value used by the Bureau of Customs in determining tariff and customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of the medical equipment from Customs custody pursuant to Section 107(A) of the Tax Code of 1997. This ruling is being issued on the basis of the forgoing 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. cIaHDA Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service