Sycamore International Shipping Corporation

March 14, 2016 BIR RULING NO. 092-16 Section 109 (1) (T) NIRC; Revenue Regulations No. 15-2015; BIR Ruling No. 385-2014 Sycamore International Shipping Corporation Unit B, 14th Floor, Sagittarius I Condominium 111 HV Dela Costa St., Salcedo Village Makati City Attention: Joselito V. Abrogar President Gentlemen : This refers to your letter dated January 5, 2016, requesting on behalf of Sycamore International Shipping Corporation , for a Certificate of Value-Added Tax (VAT) Exemption on its importation of one (1) unit brand new bulk carrier (Hull No. SC256), to be named "MV AQUARIUS", pursuant to Section 109 of the National Internal Revenue Code (NIRC) of 1997, as amended. Documents submitted show that Sycamore International Shipping Corporation , with Tax Identification No. 008-701-450-000, is a domestic corporation registered with the Securities and Exchange Commission (SEC) under Company Registration No. CS201401776; that it is duly accredited by the Maritime Industry Authority (MARINA) to engage in Domestic Shipping Business per MARINA Certificate No. DSS-2006-003-078 (2014) dated November 10, 2014 valid until November 9, 2017; and that Sycamore International Shipping Corporation will be importing one (1) unit brand new bulk carrier (Hull No. SC256), particularly described as follows: Name of Ship MV "AQUARIUS" IMO Number IMO 9764013 Flag State Panama Type of Ship Bulk Carrier Gross Tonnage (TM69) (22,600) (to be measured) Dimensions (L,B,D) 173.90m (L) x 20.00m (B) x 14.50m (D) Maker of Main Engine Mitsui Engineering & Shipbuilding Co., Ltd. No., Type, Model One (1), Diesel Engine, 6S50ME-B8.3 Rated Power 6,780 kW Owner Grabbeling International Corporation Omega Building, Mezzanine, Av. Samuel Lewis and 53rd Street, Panama City, Republic of Panama Builder, Where Built Tsuneishi Heavy Industries (Cebu), Inc., Philippines Date of Keel Laid June 10, 2015 Date of Expected February 12, 2016 Completion that MARINA has approved the importation of the above-described vessel in its letter dated December 10, 2015; and that per Affidavit of Undertaking dated October 8, 2015 executed by Joselito V. Abrogar, President of Sycamore International Shipping Corporation , the subject vessel is directly imported by Sycamore International Shipping Corporation , a MARINA-registered domestic shipowner/operator, and that the vessel is reasonably needed and will be used exclusively by the Company in its transport operations. In support of its request for exemption, Sycamore International Shipping Corporation has submitted the following documents: 1. Certified true copies of the SEC Certificate of Registration, Articles of Incorporation and By-Laws; 2. Certified true copy of the MARINA Authority to Import; 3. Certificate of Registration/Accreditation with MARINA; 4. Certified true copy of the Builder's Certificate; AIDSTE 5. Certified true copy of the Shipsales Contract dated September 3, 2015; 6. Affidavit of Undertaking; 7. Secretary's Certificates; and 8. BIR Registration. In reply, please be informed that Section 109 (1) (T) of the NIRC of 1997, as amended, provides as follows: "Sec. 109. Exempt Transactions. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. (T) 1 Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations." Based on the above-cited provision, the importation, among others, of a cargo vessel destined for domestic transport operations shall be exempt from VAT. In relation thereto, Section 4.109-1 (B) (1) (t) of Revenue Regulations (RR) No. 16-2005, as amended by RR No. 15-2015, which implements the above-quoted provision, provides: "SECTION 4.109-1. VAT-Exempt Transactions . xxx xxx xxx (B) Exempt transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT: xxx xxx xxx (t) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations: Provided, however, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA." It is noted that MV "AQUARIUS" is a brand new vessel and has been issued by MARINA with the required authority to be imported. Hence, the importation of the said vessel by Sycamore International Shipping Corporation is deemed compliant with the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA. Accordingly, the importation by Sycamore International Shipping Corporation of MV "AQUARIUS" shall be exempt from VAT pursuant to Section 109 (1) (T) of the NIRC of 1997, as amended. The VAT exemption, however, shall be subject to the strict compliance of the conditions contained in the letter of approval issued by MARINA for the importation of the subject vessel. 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Renumbered by Republic Act No. 10378.