Sales Tax — Purchase of Locally Manufactured Volkswagen Brasilia

February 13, 1981 BIR RULING NO. 038-81 195-A 000-00 038-81 Foster Parents Plan International 4700 Valenzuela St., Sta. Mesa M a n i l a Attention: Dr . William J . Keiffer Director in the Philippines Gentlemen : This refers to your letter dated September 18, 1980 requesting exemption from the payment of sales tax on the purchase of One (1) locally manufactured Volkswagen Brasilia 4-door sedan car Model 1980. It is represented that Foster Parents Plan International is a non-profit, non-denominational child and family welfare agency operating in the Philippines since 1961; that it has been granted tax exemption privileges under Diplomatic Note Agreement No. 3001 and Republic Act No. 4169; that it has assisted over 21,000 indigent families in the Philippines; and that it works in close cooperation with the Ministry of Social Services and Development. In reply, please be informed that the exemption provided by Section 1 of Republic Act No. 4169 applies only to such taxes, duties and fees for which the Foster Parents Plan, Inc. itself would otherwise be directly liable. Consequently, the Agency cannot claim exemption from the payment of the sales tax on the abovementioned motor vehicle for the reason that the same is a tax directly payable by the manufacturer thereof. (BIR Ruling No. 043-70 dated August 27, 1970). The fact that the tax may ultimately be shifted to or passed upon the Agency as part of the cost of the motor vehicle will not convert the same as a tax on the agency for the purpose of the exemption. (John Gotamco & Sons, Inc. vs. Commissioner, CTA Case No. 1625, May 21, 1969, citing Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, et al., G.R. No. L-19707, August 17, 1967). (BIR Ruling No. 100-79 dated December 7, 1979) Furthermore, Foster Parents Plan International cannot be considered an international organization within the purview of the letter dated September 5, 1974 of the Department of Finance. In view of the foregoing, your request has to be as it is hereby denied for lack of legal basis. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner