Donation of Farm Equipment and Printed Religious Materials by the Korean Firelight Youth Society for Rural Restoration

March 23, 1999 BIR RULING NO. 032-99 109 (R); 98; 188-000-00-032-99 Philippine Firelight Youth Society for Rural Restoration Multi-Purpose Cooperative, Inc. San Roque, Aposkaoy Claveria, Misamis Oriental Attention: Mr . Tonimer H . Alfeche Director Gentlemen : This refers to your letter dated March 16, 1999 requesting for a ruling on the tax consequence of the donation of farm equipment and printed religious materials in your favor by the Korean Firelight Youth Society for Rural Restoration. cdlex It is represented that you are an agricultural multi-purpose cooperative duly registered with the Cooperative Development Authority (CDA) with Certificate of Registration No. CGY-1892 issued on January 30, 1995; and that in the spirit of brotherhood, cooperation and humanitarian consideration, the Korean Firelight Youth Society for Rural Restoration, a non-resident foreign corporation, with principal and office address at Kangwon-do, Wonju-gun, Socho-myun, Dundun 2 Ri, San 171-1, Republic of Korea donated farm equipment and printed religious materials in your favor. In reply, please be informed that pursuant to Section 109(r) of the Tax Code of 1997, stating - "SEC. 109. Exempt Transactions . The following shall be exempt from the value-added tax: "(a) . . . "(b) . . . "(r) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority to their members as well as sale of their produce, whether in its original state or processed form, to non-members; their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used directly and exclusively in the production and/or processing of their produce . (Emphasis supplied) xxx xxx xxx the donation (importation) of farm equipment by the Korean Firelight Youth Society for Rural Restoration is exempt from the value-added tax (VAT), provided however, that such direct farm inputs, machineries and equipment including spare parts thereof shall be used directly and exclusively in the production and/or processing of your produce. Moreover, pursuant to Section 4.103-1(B)(u) of Revenue Regulations No. 7-95, as amended by Revenue Regulations No. 6-97, stating - "SEC. 4.103-1. Exemptions . (A) In general. . . . xxx xxx xxx "(B) Exempt Transactions. - The following shall be exempt from the VAT: "(a) . . . "xxx xxx xxx "(u) Foreign and local donations to, as well as, by religious institutions of religious articles, particularly bibles, crucifix, vestments or similar articles, to be used actually, directly and exclusive for religious purposes and not done in the ordinary course of trade or business." LibLex "xxx xxx xxx" the donation by the Korean Firelight Youth Society for Rural Restoration of printed religious materials in your favor is not subject to VAT. This ruling is being issued on the basis of the foregoing representations. 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.) BEETHOVEN L. RUALO Commissioner of Internal Revenue