Imported Vehicles Under the No-Dollar Import Program which are Donated to the Government Shall be Exempt from VAT and Donor's Gift Tax

July 15, 1991 BIR RULING NO. 133-91 M.O. 350 103 (u), 149 000-00 132-91 Gentlemen : This refers to your letter dated March 26, 1991 to the Office of Muslim Affairs, Office of the President, which was referred to this Office for appropriate action. It is represented that you are a non-stock, non-profit corporation organized for social welfare, cultural, religious and educational purposes; that you used to receive donations from foreign sources to assist you in your effort to rehabilitate rebel surrenderees, juvenile delinquent and victims of natural calamities i.e. earthquakes and typhoons, in Muslim Mindanao, that one of such donations involves the no-dollar import shipment of six (6) used and reconditioned vehicles donated by a Japanese Foundation from Japan (covered by Bill of Lading No. 430-000304, AE70-7312396, MS110-031167, EE80-7045602, AE81-6173765 and AE-81-6198944; that you have offered to assign said vehicles to the Department of Social Welfare and Development (DSWD) and that the Secretary has indicated that she will accept the said vehicles, based on the following terms and conditions: 1) The Foundation should execute a Deed of Donation in favor of the DSWD, waiving all the Foundation's right over the vehicles, instead of an assignment; that all cost pertaining to the release of the vehicles will be to the account of the Foundation; and that final acceptance of the donation by DSWD will be upon the release of the said vehicles from the Bureau of Customs. cdta Based on the foregoing representation, you now request for a ruling that said importation be exempt from internal revenue tax under the recent Presidential Memorandum Order No. 350. In reply, please be informed that Section 2 of the President's Memorandum Order No. 350 mandates the Presidential Management Staff (PMS) in coordination with the DSWD to issue the necessary clearances to the importation and donations under the Memorandum Order which will serve as the basis for the Bureau of Internal Revenue and Bureau of Customs to process the papers relative to said importations and donations to be used in the relief and rehabilitation program of the government. Section 2 and 3 of said Memorandum Order No. 350 dated March 14, 1991 states: "SEC. 2. The Presidential Management Staff. (PMS) of the Office of the President shall, in coordination with the Department of Social Welfare and Development (DSWD) and the Department of Health (DOH), issue the necessary clearances to the importations and donations under this Memorandum Order, which clearances shall serve as basis for the Bureau of Customs and the Bureau of Internal Revenue to process the papers relative thereto. "SEC. 3. Foreign donations which have arrived in the country prior to the issuance of this Memorandum Order, which are pending at their port of entry, may also be processed under this Memorandum Order upon the issuance of the pertinent clearances by the PMS. Provided, that such donations are assigned to the Department of Social Welfare and Development (DSWD) or Department of Health (DOH) for purpose stated in Section 1 hereof." In his letter dated June 6, 1991, Mr. Coloma issued a clearance to the effect that the aforementioned importation is qualified for processing under the cited provision of Section 3 of the President's Memorandum Order. Since the imported six (6) used and reconditioned vehicles under the no-dollar import scheme have been donated by you to the Department of Social Welfare and Development to be used in the relief and rehabilitation program of the Government, the said importation shall be exempt from VAT pursuant to Section 103 (u) and from the donor's gift tax pursuant to Section 94 (a) (2) both of the Tax Code, as amended. This serves as your authority to cause the release of the above-described articles from customs custody without the payment of internal revenue taxes, e.g., VAT and/or excise tax if any under Sections 101 (a) and 149 respectively of the Tax Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner