Importation of Equipment on Behalf of and for the Use of a Sister Company

January 29, 1960 BIR RULING NO. 051-60 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P.O. Box 589, Manila Gentlemen : Reference is made to your letter dated December 16, 1959, requesting a ruling as follows: "X Company will import equipment on behalf of and for the use of its sister company, B, because the latter does not have the facilities to make the importation. When the imported equipment arrives it will be transferred to B at its landed cost plus other charges such as customs duties, special import tax and the compensating tax paid by X. In other words X will transfer the equipment to B at the actual cost of bringing such equipment in the Philippines without any profit on the transfer. X is not provided with a privilege tax receipt (C-14) as an importer. "We would like to know what internal revenue taxes would X and B be liable under the transaction stated above, if any." In answer thereto, I have the honor to inform you that, as "X" will import the equipment in question not for the purpose of resale but merely to accommodate its sister company, "B", which will in turn use the same, the payment by the former of the corresponding compensating tax on the importation is sufficient, "X" and "B" not being further liable for any tax. Needless to state, this ruling is good only insofar as internal revenue laws and regulations are concerned, the procedure of importation outlined above not being in violation of any of said laws and regulations. Accordingly, should such manner of importing articles be against any law or regulations of any entity, such for example as the Central Bank, this ruling should not be interpreted as encouraging or sanctioning violation of the law or regulations concerned. cdta Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue