Oromarine Shipping Corporation

March 16, 2016 BIR RULING NO. 095-2016 Section 109 (1) (T) NIRC; Revenue Regulations No. 15-2015; BIR Ruling No. 385-2014 Oromarine Shipping Corporation 1803 J. Nakpil cor. Vasquez Sts. Malate, Manila Attention: Atty. Grace K. Evasco President Gentlemen : This refers to your letter dated September 3, 2015, requesting on behalf of Oromarine Shipping Corporation , for a Certificate of Value-Added Tax (VAT) Exemption on its importation of two (2) units of cargo vessels LCT "OMS 06" and LCT "OMS 08," pursuant to Section 109 of the National Internal Revenue Code (NIRC) of 1997, as amended. HTcADC Documents submitted show that Oromarine Shipping Corporation , with Tax Identification No. ___________, is a domestic corporation registered with the Securities and Exchange Commission (SEC) under Company Registration No. __________ that it is duly accredited by the Maritime Industry Authority (MARINA) to engage in Domestic Shipping Business and Ship Management Business per MARINA Certifications dated September 4, 2015 valid until September 3, 2018; and that Oromarine Shipping Corporation is currently importing two (2) units of steel hull deck cargo LCT (Landing Craft Transport) vessels, particularly described as follows: Vessel's Name LCT OMS 06 LCT OMS 08 Vessel Flag Sierra Leone Flag Sierra Leone Flag GRT 995 995 NRT 517 517 LOA 79.15m 79.15m Breadth 16.80m 16.80m Depth 4.20m 4.20m Main Engine Weichai 8170, 530KW*2set, 1200r/min Weichai 8170, 530KW*2set, 1200r/min Name of Builder Linhai Huajie Shipbuilding Co., Ltd. Linhai Huajie Shipbuilding Co., Ltd. Classification ZC ZC Year Built July 2014 July 2014 that MARINA has approved the importation of the above cargo vessels in its two (2) letters both dated October 22, 2015 addressed to Oromarine Shipping Corporation ; and that per Sworn Statement dated November 2, 2015 executed by Atty. Grace K. Evasco, President of Oromarine Shipping Corporation , the subject vessels are not manufactured domestically in sufficient quantity, of comparable quality and at a reasonable price in the Philippines; and that said cargo vessels are reasonably needed and will be used exclusively by the Company in its transport operations as a MARINA-registered domestic shipping operator. In support of its request for exemption, Oromarine Shipping Corporation has submitted the following documents: 1. 2. 3. 4. In reply, please be informed that Section 109 (1) (T) of the NIRC of 1997, as amended, provides as follows: " Sec. 109. . Exempt Transactions. (1) (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. xxx xxx xxx (B) (1) xxx xxx xxx (t) In view of the foregoing, the importation by Oromarine Shipping Corporation of the aforedescribed cargo vessels LCT "______" and LCT "______" having been granted by MARINA with the necessary clearances to be imported, and are, thus, deemed compliant with the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA, shall be exempt from VAT. The VAT exemption, however, shall be subject to the strict compliance of the conditions contained in the letters of approval issued by MARINA for the importation of the subject cargo vessels. aScITE 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.