Request for Tax/VAT Exemption Certificate on Ground of Being an International Organization

January 15, 1997 BIR RULING NO. 005-97 103 (u) 000-00 005-97 Food and Agriculture Organization of the United Nations 14/F Vernida IV Condominiums 128 Alfaro St., Salcedo Village Makati City Attention: Dr . Peter E . Kenmore Regional Programme Coordinator Gentlemen : This refers to your letter dated June 20, 1996 requesting for a Tax/VAT Exemption Certificate on the ground that it is an international organization. Documents submitted to this Office disclosed that the Intercountry Programme for Integrated Pest Control in Rice in South and Southeast Asia is a regional project of the Food and Agriculture Organization of the United Nations; that per Certification issued by FAO Representative dated January 19, 1996, the Food and Agriculture Organization of the United Nations in the Philippines, as a Representative of a United Nations specialized agency is exempt from all direct taxation pursuant to Section 9(a) of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations, and from value-added tax imposed under Section 103(u) of the Tax Code. In reply, please be informed that pursuant to Article 3 Section 9(a) of the said Convention, the tax exemption privileges granted to the specialized agencies are limited to direct taxes, consequently the Food and Agriculture Organization of the United Nations being an international organization is exempt from taxes for which it is directly liable. However, there is no showing that your tax exemption privilege extends to exemption from indirect tax such as the value-added tax. Under Section 99 of the Tax Code, as amended by R.A. 7716 the value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. Such being the case, your seller-suppliers of goods and services being the parties, directly liable for the VAT may legally pass on the VAT to you. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue