Tax Exemption Privilege of International Committee of the Red Cross

February 24, 1988 BIR RULING NO. 057-88 103 (u) 000-00 057-88 Gentlemen : This refers to your letter dated January 29, 1988 requesting exemption from value-added tax based on your agreement with the Government of the Republic of the Philippines. cdt In reply, I have the honor to inform you of the pertinent tax exemption provisions provided in the Headquarters Agreement of the International Committee of the Red Cross and the Philippine Government reading as follows: Article 2 PROPERTY AND FUNDS 1. "The ICRC Delegation shall be exempt from all regional, municipal, provincial or national dues and taxes. The ICRC Delegation shall not, however, claim exemption from fees which are levied for public utility services. xxx xxx xxx 2. "The ICRC Delegation shall be exempt from taxes and customs duties and free from all restrictions and prohibitions in respect of the import and export of all items necessary for its activities, subject to the provisions of pertinent Philippine laws, rules and regulations. It is understood that the duty on such items will become payable in the event of the sale or disposal, within three years of importation, to a person not entitled to this exemption. xxx xxx xxx 3. "The ICRC Delegation shall be exempted from all taxes and customs duties in respect of the importation of a motor vehicle for the official use of the Delegation." Gleaned from the foregoing provision, it is clear that your tax exemption privilege does not include exemption from indirect tax such as the value-added tax. Such being the case, your local purchases as well as sale of services to you are subject to the value-added tax. However, your importations of articles necessary for your activities, including importation of motor vehicles for the official use of your delegation, shall be exempt from the value-added tax pursuant to Section 103(u) of the Tax Code, as amended by Executive Order No. 273. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner