VAT Exemption of Musical Instruments and Educational Materials Brought Abroad in Behalf of a Foundation

October 30, 2000 BIR RULING NO. 054-00 107 (A) 109 (y) 000-00 Asosasyon ng Musikong Pilipino Foundation, Inc. Rm. 1006 Jafer Place Building Eisenhower Street, Greenhills, San Juan, M.M. Attention: Mr . John J . Lesaca Vice-Chairman Gentlemen : This refers to your letter dated April 7, 1999 stating that the Asosasyon ng Musikong Pilipino Foundation, Inc. (AMP) is a non-stock and non-profit donee institution formed with the intention of professionalizing the Filipino musician and providing benefits that will help them cope with the daily rigors of their career; that your officers include the former First Lady Mrs. Amelita M. Ramos as Chairperson, Mr. John J. Lesaca as Vice-Chairman and Honorable Ernani M. Cuenco, Jr. as President; that during your travel abroad you intend to maximize your trip by purchasing various small musical instruments, educational materials (books, VHS tapes, etc.) in behalf of the foundation; that all of this will be non-commercial in quantity and as accompanied baggage; that the Foundation will provide these to Filipino musicians, providing them with the wider choice of music materials that will enhance their knowledge in music and to better perform locally and internationally; and that this is aimed at contributing to the economic development of the country. Based on the foregoing facts, you are requesting for a ruling that the musical instruments and educational materials you brought abroad in behalf of the Foundation be exempt from the payment of value-added tax (VAT). In reply, we regret to inform you that your request cannot be granted for lack of legal basis. Importation of various musical instruments is subject to 10% VAT based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody pursuant to Section 107(A) of the Tax Code of 1997. On the other hand, educational materials such as books shall be exempt from VAT pursuant to Section 109(y) of the Tax Code of 1997. These do not include, however, VHS tapes and other educational materials other than books. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. ATcaHS Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue