Hawaiian Airlines, Inc.

January 8, 2010 BIR RULING [DA-(VAT-001) 004-10] Sec. 109 (T); RMC 46-08 Hawaiian Airlines, Inc. International Passenger Terminal Ninoy Aquino International Airport Pasay City Attention: Kevin Blumberg Station Manager Gentlemen : This refers to your letter dated June 22, 2009 requesting for a ruling that the importation of a 1992 Ford A/C/Truck by Hawaiian Airlines, Inc. Philippine Branch (HAI-Phil.) is exempt from value added-tax (VAT). It is that represented that HAI-Phil. is the Philippine branch office of Hawaiian Airlines Inc., a foreign company organized and existing under the laws of Delaware, United States of America; that HAI-Phil. is engaged in international air transport operations; that in May 2009, HAI-Phil. imported one (1) unit of a 1992 Ford A/C Truck from Los Angeles, California covered by Bill of Lading Number L0928135 and Commercial Invoice No. 050209 both dated May 1, 2009; and that said truck will be used exclusively by HAI-Phil. for its international air transport operations. In reply, please be informed that Sec. 109 (T) of the 1997 Tax Code, as amended by Republic Act 9337, provides as follows: "Section 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value added tax: xxx xxx xxx (T) Importation of fuel, goods and supplies by persons engaged in international shipping or air transport operations:" TEDaAc The above provision is clarified by Revenue Memorandum Circular No. 046-08 dated February 1, 2008, Q & A 10 states thus: "REVENUE MEMORANDUM CIRCULAR NO. 046-08 SUBJECT : Clarification of Issues Concerning Common Carrier by Air and Their Agents Relative to the Revenue and Receipt from Transport of Passengers, Goods/Cargoes and Mail, and from Excess Baggage xxx xxx xxx Q-10: Are importations of fuel, goods and supplies by persons engaged in international air transport operation exempt from VAT? A-10: The importation of fuel, goods and supplies for use in the international air transport operations is VAT exempt. Provided, that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port without stopping at any other port in the Philippines to unload passengers and/or cargoes loaded in and from another domestic port; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT." Based on the foregoing, the importation of fuel, goods and supplies by a person engaged in international air transport operations is exempt from VAT if the imported fuel, goods, and supplies shall be used exclusively or pertain to the transport of goods and/or passenger from a Philippine port directly to a foreign port, without stopping at any local port to unload passengers and/or cargoes. Since HAI-Phil. is an entity engaged in international air transport operations and considering further that the Ford A/C Truck imported by HAI-Phil. shall be used exclusively for its international air transport operations, this Office is of the opinion as it hereby holds that the importation of the said equipment is exempt from VAT pursuant to Section 109 of the 1997 Tax Code, as amended. 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, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group