BIR Ruling No. 043-80

October 27, 1980 BIR RULING NO. 043-80 24-a 000-00 43-80 Zurichconsult, Ltd. Sunset View Towers 2230 Roxas Boulevard Pasay City Attention : Mr . Oscar E . Malinis Philippine Representative Gentlemen : This is in response to your letter dated May 2, 1980, requesting confirmation of your tax-exempt status as consultant under the Contract for Consulting Services for the design and detailed engineering of the Bayambang-Moncada Flood Control Project of PNR's Main North Line (Km. 150.00 to Km. 165-560), which contract was entered into between you and the Ministry of Public Works (representing the Government of the Republic of the Philippines), and approved by the President of the Philippines on March 19, 1980. cdt Quoted below is Article 6, Section 6.01(1) of the aforesaid contract: (1) Taxes The Government hereby assumes payment of all taxes and levies charged, assessed and/or to be paid under the laws of the Philippines under this Contract with the CONSULTANT, as well as its personnel and employees who are not resident nationals of the Philippines. In this connection, it may be noted that tax exemption of parties contracting with the government is authorized under R.A. No. 4860 (Foreign Borrowing Act), as amended by P.D. No. 150. Specifically, under Section 4-A of said Act, as to be amended, it is provided that upon recommendation of the Secretary of Finance, in consultation with the National Economic and Development Authority and upon approval of the President of the Philippines, contracts involving the availment or utilization of the proceeds of loans, credits or indebtedness obtained under the provisions of said Act may provide for exemption from taxes, charges or other levies. Furthermore, by virtue of its assumption of the taxes which would otherwise have been payable by you, the Ministry of Public Works as representative of the Government, shall be directly liable to pay these tax obligations, pursuant to Section 23 of Presidential Decree No. 1177, known as the Budget Reform Decree of 1977. Very truly yours, ROMULO M. VILLA Acting Commissioner