Request for Exemption from Value-Added Tax of Shipment Consisting of 22 Pkgs. Computer Hardware and Software

April 14, 1997 BIR RULING NO. 052-97 P.D. 1034; 101 (a) 000 00 052-97 Bank of Boston 23rd Floor, 6750 Ayala Avenue Makati City, Metro Manila Gentlemen : This refers to your letter dated may 28, 1996 which was referred to this office by the Assistant Secretary, Revenue Operations Group, Department of Finance, relative to your request for exemption from the value-added tax of your shipment consisting of 22 pkgs. Computer Hardware and Software, covered by AWB # 400-94119830 valued at $122,009.00. In reply, please be informed that your request cannot be granted for lack of legal basis. Section 7 (a) of P.D. No. 1034 merely reduced the rate of tax payable by offshore banking units on their transactions with non-residents and other offshore banking units to five percent (5%) on the net income which shall be in lieu of all taxes on the said transactions. Nowhere in the said Presidential Decree is a provision exempting offshore banking units from taxes and duties on their importations of goods. In the absence of an exempting provision, this Office cannot exempt your aforesaid importation from the VAT imposed under Section 101 (a) of the Tax Code, as amended by R.A. Nos. 7716 and 8241. It is a well-settled rule that he who claims exemption should prove by convincing proofs that he is exempted. (Visayan Cebu Terminal Co., Inc. vs. Commissioner, L-19530 & L-19444, February 27, 1965) Exemptions from taxation are highly disfavored in law; and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications. (Asiatic Petroleum Co. vs. Llanas, 49 Phil. 466 cited in Collector vs. Manila Comm. of Customs, L-28731, 28902, Mar. 29, 1979) aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue