Imported Articles Exempted from 10% VAT Under the Tax Exemption Clause of the UNESCO Florence International Agreement

August 8, 1991 BIR RULING NO. 147-91 103 (u) 211-89 147-91 Gentlemen : This refers to your letter dated June 1, 1990 requesting that your following importation be exempted from imposition of the 10% value-added tax, based on Section 103 (u), NIRC, in relation to the UNESCO Florence International Agreement to which the Philippines is a signatory, viz. : "53 cartons said to contain 20 sets of 'analysis for Decision Making', 100 sets of 'Speech Power' and 100 sets of `Super Reading (J. Ed.)' covered by Invoice No. 1117/01/90 issued by LEARN INC. of Singapore ." It is represented that the said materials were imported by you for distribution to different schools throughout the country; that the UNESCO National Commission of the Philippines and the Department of Education, Culture and Sports have certified to the effect that the said importations are covered and classified under ANNEX C (iii) of the UNESCO Florence Agreement as " sound recordings ." In reply, we quote the pertinent portion of the tax exemption clause of the Agreement on the Importation of Educational, Scientific and Cultural Materials, otherwise known as the UNESCO Agreement, which entered into force with respect to the Philippines on August 30, 1951 (p. 591, vol. II, Tax Treaty Series), to wit: "ARTICLE I "1. The Contracting States undertake not to apply customs duties or other charges on, or in connection with, the importation of: "(a) Books, publications and documents, listed in Annex A to the Agreement; "(b) Educational Scientific and cultural materials, listed in Annexes B, C, D, and E to this Agreement which are the products of another contracting state, subject to the conditions laid down in those annexes. "(c) Internal taxes or any other internal charges of any kind imposed at the time of importation . . . It is observed that Annex "A" refers to books, publications and documents, Annex "B", to works of art and collector's piece of an Educational Scientific and Cultural materials, Annex "C" to visual and auditing materials of an educational, scientific or cultural character, Annex "D" to scientific instruments or apparatus and Annex "E" to articles for the blind. In accordance with the foregoing tax exemption clause in the UNESCO Florence Agreement and based on the certification of the Secretary-General, UNESCO National Commission of the Philippines, that the adverted importation of 53 cartons consisting of 100 sets of speech power, 20 sets of Analysis for Decision Making and 100 sets of super reading (Jr. Ed.) covered by Invoice No. 117/01/90 dated January 24, 1990 and B/L No. Mla-0024 coming from Singapore are among the articles covered by the tax exemption clause under Annex "C" (iii) of the UNESCO Florence Agreement (1st Indorsement dated May 8, 1990 of the Secretary-General UNESCO National Commission of the Philippines) the same are exempt from VAT pursuant to Section 103 (u) of the Tax Code. (BIR Ruling No. 211-89). cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner