Whether Local Film Producers Who Produce Quality Films May be Exempted from VAT or Other Taxes

August 9, 1994 BIR RULING NO. 125-94 102 000-00 125-94 Board of Trustees Film Development Foundation of the Philippines (FDFP) Malacaang, Manila Attention: Secretary Leonora Vasquez de Jesus Head, Presidential Management Service Gentlemen : This refers to your verbal query whether local Film producers who produce quality films may be exempted from VAT or other applicable internal revenue taxes by virtue of the President's Memorandum dated March 8, 1994 instructing you to perform all the powers and functions provided under Executive Order No. 1051 especially the granting of incentives to the local producers of quality films. In reply, please be informed that none of the issuances that you are relying upon to support your claim for tax exemptions, namely: Executive Order Nos. 811, 770, 1051, or the Memorandum of the President dated March 5, 1994 give any indication that the local producers who produce films of the highest quality are entitled to VAT or excise tax exemptions on their rental income for the lease of such films. Settled is the rule that tax exemptions cannot be established by mere implication but must be clearly expressed. (Wander Mechanical Eng'g. Corp. vs. C.T.A., et al. 64 SCRA 555). Based on the foregoing, your query is answered in the negative for lack of legal basis. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue