Atty. Pauline Tumonong-Nuega

February 6, 2009 BIR RULING [DA-(VAT-017) 071-09] Atty. Pauline Tumonong-Nuega No. 10, 7th Lacson Street Bacolod City Madam : This refers to your letter dated January 20, 2009 stating that your client, the City of Sagay, Province of Negros Occidental, is an importer of 575x360x10MMx11.80 Sheet Pile from Nanjing Wanze Precision Metal Producing Co., Ltd. per Prof. Inv. No. WZ08121001-2008; and that the City Mayor, Hon. Alfredo G. Maraon, Jr. is authorized to purchase the steel sheet in the amount of US$553,833 to be utilized in the development of Old Sagay Feeder Port per Resolution No. 2008-165. Based on the foregoing representations, you now request for an opinion as to whether or not the importation of steel sheet is exempt from the payment of value-added tax (VAT). In reply thereto, please be informed that beginning March 10, 1987, the effective date of Executive Order (EO) No. 93, all tax and duty incentives granted to government and private entities have been withdrawn with the exception of those enumerated under Section 1 of said EO. Accordingly, since the City of Sagay is not among those exempted under Section 1, supra, the tax and duty incentives previously enjoyed by it has been withdrawn as of March 10, 1987. Moreover, in the case of importation of taxable goods, the importer, whether an individual or corporation and whether or not made in the course of his trade or business, shall be liable to VAT imposed in Section 107 of the Tax Code. Since VAT is an indirect tax, the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. (BIR VAT Ruling No. 063-02 dated September 16, 2002) SUCH BEING THE CASE, this Office holds that the importation of steel sheet by the City of Sagay is subject to VAT as imposed under Section 107 (A) of the Tax Code of 1997, as amended by Republic Act No. 9337, as implemented by Revenue Regulations No. 16-2005. ECSHAD 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 null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service