Taxability of Television Equipment Donated to a Foundation by the Matsushita Electrical Philippines Corporation and Panasonic of Japan

February 24, 1995 BIR RULING NO. 040-95 101 (a) 000-00 040-95 Museo Pambata Foundation, Inc. Roxas Blvd. cor. South Drive Manila Attention: Ms . Estefania Aldaba-Lim President Gentlemen : This refers to your letter dated November 21, 1994 to the Honorable Secretary of Finance who referred the same to US for the issuance of a ruling relative to the taxability of television equipment donated to your foundation by the Matsushita Electrical Philippines Corporation and Panasonic of Japan. LLpr Records show that the Secretary-General of the UNESCO National Commission of the Philippines has certified that said importations fall under the category of "scientific instrument or apparatus" pursuant to Annex D, paragraphs (a) and (b) of the UNESCO-Florence Agreement. In reply, please be informed that pursuant to Annex D, paragraphs (a) and (b) of the UNESCO-Florence Agreement, stating ANNEX D SCIENTIFIC INSTRUMENTS OR APPARATUS "Scientific instruments or apparatus, intended exclusively for educational purposes or pure scientific research, provided: "(a) That such scientific instruments or apparatus are consigned to public or private scientific or educational institutions approved by the competent authorities of the importing country for the purpose of duty-free entry of these types of articles, and used under the control and responsibility of these institutions; "(b) That instruments or apparatus of equivalent scientific value are not being manufactured in the country of importation." the following are the criteria in exempting importation of scientific equipment from duties, viz: that said scientific instrument or apparatus are consigned to public or private scientific or educational institution; that their importations are approved by competent authorities of the importing country; that said importations shall be used under the control and responsibility of these institutions; and that the instruments or apparatus are not manufactured in the Philippines. Since the aforesaid importations consisting of television equipment appear to be manufactured and available in the Philippines, it is not covered by the duty-free clause of the UNESCO-Florence Agreement. Accordingly, it will not also qualify for tax exemption, pursuant to Section 101 of the Tax Code, as amended, in relation to Section 105 of the Tariff and Customs Code. LibLex Based on the foregoing, we regret to inform you that your request for the entry of the aforesaid television equipment without the payment of the Value-Added Tax (VAT) has to be as it is hereby denied for lack of legal basis. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue