Tax Exemption Privileges of Imported Articles Under the UNESCO Florence Agreement

April 29, 1991 BIR RULING NO. 076-91 101 (a) 000-00 076-91 Gentlemen : This refers to your letter dated January 9, 1991, in effect, requesting a ruling that your importation of console with case and two (2) manuals and spare parts of pipe organ shipped from Germany is exempt from the value-added tax (VAT). cdt It is represented that the San Sebastian Church, a national historical landmark, will celebrate its centennial this year; that the National Historical Institute prepared a restoration program which includes the restoration and repair of the original pipe organ of the church; that for this purpose, spare parts for the pipe organ were ordered from Germany; that it is not of commercial quantity and that the consignee of record is the National Historical Institute; that under the provisions of the UNESCO Florence Agreement, the same is classified as Annex A(ii) "Newspapers and Periodicals" and Annex (B) classified as "Scientific Instruments or Apparatus". In reply, please be informed that your request for exemption cannot be granted for lack of legal basis. The UNESCO Agreement on the importation of Educational, Scientific and Cultural Materials, which entered into force with respect to the Philippines on August 30, 1952, provides that to facilitate the free flow of books, publication and educational, scientific and cultural materials, the contracting states shall undertake not to apply customs duties or other charges on or in connection with the importation of articles listed in Annexes A to E of said Agreement. It is noted that Annex A is a descriptive list of books, publications and documents; Annex B is a descriptive list of works of arts and collector's pieces of an educational scientific or cultural character; Annex C refers to visual and auditory materials of an educational, scientific or cultural character; Annex D refers to scientific instruments and apparatus; and Annex E refers to Articles for the blind. The same paragraph of the Agreement, however, adds that the contracting state is not prevented from levying on imported materials, internal taxes or any other internal revenue charges of any kind imposed at the time of importation. In view thereof, this Office is of the opinion as it hereby holds that in order to be exempt under the UNESCO Agreement the articles imported to the Philippines must be among those enumerated and described in Annexes A and E; that the exemption is limited to customs duties or other charges; and that the tax exemption privilege does not include internal revenue taxes. In other words, your importation of console with case (and 2 manuals) and spare parts of a pipe organ even if the same are to be used in your church designated as a historical landmark and/or consigned to the National Historical Commission are not within the scope of the tax exemption contemplated under the UNESCO Agreement; hence, your said importations are subject to VAT pursuant to Section 101(a) of the Tax Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner