Assignment and Transfer of Privilege Tax Exemption Cannot Be Done Unless Clearly Provided for in Law

March 23, 1975 BIR RULING NO. 002-75 Assignment and transfer of privilege tax exemption cannot be done unless clearly provided for in law . This refers to your letter dated September 24, 1974, requesting that Assessment No. WS-73-0726-1970-1973 issued on August 31, 1973 against the Department of Commerce and Industry, Manila in the amount of P328,601.12 representing withholding tax at source due on remittances of interest payments to AB Company, Inc., New York City, U.S.A. for the years 1970, 1971, 1972 up to January 31, 1973, be set aside on the ground that this Office in a letter dated September 7, 1971 ruled that the debtor, which is the Department of Commerce and Industry, being a government agency is not liable for the tax. In reply thereto, I have the honor to inform you, that after a restudy of this case, this Office is of the opinion that the said ruling of September 7, 1971, as well as BIR Ruling No. 65-137 dated December 28, 1965 cited herein, have no legal basis. This is so because the government entities concerned, in effect, assigned or transferred their privilege of tax exemption in favor of parties which are directly and personally liable for the payment of the tax. The general rule is that such assignment and transfer cannot be done without the consent of the legislature in clear and unmistakable terms. Such being the case, this Office has finally decided to revoke, as it hereby revokes, said rulings. However, such revocation shall not be given retroactive application in the instant case, since the revocation will be prejudicial to that Department. (Sec. 338-A, Tax Code) Accordingly, this Office has also decided that the above assessment in the amount of P328,601.12 should be, as it is hereby, withdrawn and cancelled and this case considered closed and terminated. cd