BIR Ruling No. 039-65

May 13, 1965 BIR RULING NO. 039-65 MEMORANDUM for: The Revenue Operations Head (Assessment) This is with reference to BIR Ruling No. 87, series of 1958 to the effect that aviation gasoline and oil removed from bonded warehouse of gasoline companies and delivered to foreign airlines for use of their passenger planes engaged in international flights are, subject to certain conditions, exempt from payment of specific tax imposed by Section 142 of the National Internal Revenue Code. The Department of Finance on September 10, 1963 has requested this Office to review the basis upon which said BIR Ruling No. 87, series of 1958 was issued. In compliance therewith, this Office undertook the examination thereof and, after careful study and analysis, we arrived at the conclusion that it indeed lacks legal basis. The only possible ground for granting tax exemption to airlines engaged in international flights is reciprocity. The theory that the delivery of said aviation gasoline and oil ex-bonded warehouse direct to the aircrafts is, in effect, a reexportation is not applicable because the gasoline is not actually consigned back to the source or to any place outside the country but sold for actual use and consumption of the buyer starting from the Philippines and consumed on the way. In view of the foregoing, aviation gasoline and oil sold to foreign airlines, whose country has no bilateral agreement with the Republic of the Philippines, are subject to the specific tax even if they are to be actually used outside of Philippine jurisdiction. This view was concurred in by the Secretary of Finance. BIR Ruling No. 87, series of 1958, is hereby revoked. Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue