Exemption from Ad Valorem Tax on Automobiles

June 23, 1989 BIR RULING NO. 131-89 101 (b) 000-00 131-89 Gentlemen : This refers to your letter dated May 30, 1989 requesting a ruling whether your three (3) vehicles consisting of Toyota Land Cruisers with a sitting capacity of five (5) which are to be sold locally to non-exempt persons are subject to the ad valorem taxes on automobiles imposed by Section 149 of the Tax Code, as amended by Executive Order No. 273. aisadc It appears that said vehicles were purchased by you from Japan in 1984; that in a letter dated June 28, 1984, you informed the Secretary General of the Philippine National Red Cross (PNRC) that you will soon receive the said vehicles, but as agreed upon between you and PNRC, the same will be imported in the name of PNRC for customs clearance and tax exemption; that in order to show that the vehicles were imported in the name of PNRC, a Deed of Donation was executed on July 4, 1984 between you and PNRC whereby the same were donated to the latter; that in a letter dated July 4, 1984, the Secretary General of PNRC informed you that the vehicles have already arrived and will try to have the shipment cleared from Customs as soon as possible; that as a consequence, and in view of PNRC's exemption from taxes and duties on all importations as provided for in P.D. No. 1264, said vehicles were released from customs custody without payment of taxes and duties; that the Certificate of Registration of said vehicles, however, show that the same are registered in the name of the International Committee of the Red Cross but "subject to duties and taxes when sold to non-exempt persons." Moreover, investigation conducted by this Office disclosed that the aforesaid vehicles are utility vehicles with a sitting capacity of ten (10), excluding the driver, and that the same are being used by you in delivering relief goods in remote areas. In reply, please be informed that under the foregoing findings, said vehicles are not subject to the ad valorem tax on automobiles imposed by Section 149 of the Tax Code, as amended by Executive Order No. 273. (BIR Ruling No. 075-89) However, said vehicles are subject to the 10% value-added-tax payable by the purchasers thereof, it appearing that the vehicles are still tax-free importations and that the purchasers are non-exempt persons. ([Sec. 101(b), Tax Code] Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner