Exemption from the 10% Overseas Communications Tax

May 28, 1990 BIR RULING NO. 100-90 118 (b) 000-00 100-90 Gentlemen : This refers to your letter dated August 5, 1989, in effect requesting exemption from the 10% overseas communications tax being imposed by Globe Mackay Cable Radio Corporation (GMCRC) and the Philippine Long Distance Telephone Company (PLDT) on your overseas communication in various forms. aisadc In reply, please be informed that Section 118(b) of the Tax Code, as amended, states that the 10% overseas communications tax shall not apply, among others, to the Government of the Philippines or any of its political subdivision or instrumentality. A government instrumentality is a corporation owned or controlled by the government to promote certain aspects of the economic life of the people. (Gonzales vs. Hechanova, 9 SCRA 230) It is also defined as an "agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds and enjoying operational autonomy, usually a charter. This term includes regulatory agencies, chartered institution and government-owned or controlled corporations" (Executive Order No. 292 otherwise known as the Administrative Code of 1987) The Cultural Center of the Philippines falls within the definition of a government instrumentality having been vested with the special functions of promoting, enhancing and developing the distinct Filipino culture and endowed with a corporate personality separate and distinct from that of the government. (Opinion No. 050, Series of 1988 of the Government Corporate Counsel) Such being the case, all payments made by that Office on outgoing telecommunication services are exempt from the 10% overseas communications tax. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner