Tax Exempt Status of APT

February 12, 1988 BIR RULING NO. 045-88 99 000-00 045-88 Gentlemen : This refers to your letter dated January 7, 1988 stating that Asset Privatization Trust (APT) was created under Proclamation No. 50 issued on December 8, 1986 which shall for the benefit of the National Government, take title to and possession of, conserve, provisionally manage, and dispose of non-performing government assets; that APT shall exist for a period of five years; that all assets held by it, whether monies or properties, as well as all liabilities outstanding upon the expiration of such period shall revert to and be assumed by the National Government; that whereas Sec. 35 of said Proclamation No. 50 granted tax-exempt status to APT, the same appears to have been withdrawn by Executive Order No. 93 effective March 10, 1987; and that under FIRB Resolution No. 4-87, APT's tax exempt status was restored. Based on the foregoing facts, you now request for a ruling as to whether you are subject to the value-added tax. In reply, please be informed that your request is answered in the negative. Under Section 99 of the Tax Code reading: "Sec. 99. Persons Liable . Any person who, in the course of trade or business, sells, barters or exchanges goods, renders services, or engaged in similar transactions and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 100 to 102 of this Code." (Emphasis supplied) in order to be liable to the value-added tax, there must be a sale in the Philippines (except on imports); the sale must be of taxable goods or services; the seller must be a taxable person; and the sale must be made by such taxable person in the course or furtherance of his/its trade or business . That the APT is not engaged in trade or business can be gleaned from Section 1, Article I of Proclamation No. 50 which provides that "it shall be the policy of the State to promote privatization through an orderly, coordinated and efficient program for the prompt disposition of the large number of non-performing assets of the government financial institutions, and certain government-owned or controlled corporations which have been found unnecessary or inappropriate for the government sector to maintain." Moreover, by way of explanatory note, it states that "the transfer and prompt disposition of the larger non-performing assets of certain government financial institutions are central to the rehabilitation of these institutions and the economic recovery program, and that in the execution of this task it is essential to devolve such responsibility upon a specialized entity external to the government financial institutions themselves so that the latter will not be distracted and their energies diverted from the vital concerns of inherent and substantive financial operations." cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner