Pilot Provincial Project

April 29, 1993 BIR RULING NO. 159-93 PILOT PROVINCIAL PROJECT 102 (a) 042-92 159-93 Pilot Provincial Agricultural Extension Project 2nd Floor P & L Building 116 Legaspi Street, Legaspi Village P.O. Box 107 MCC 3117 Makati, Metro Manila Attention: Ms . Connie Panibio Liaison Officer-Manila Office This refers to your letter dated October 12, 1992, in effect, requesting for a ruling on the tax consequences in the implementation of the Pilot Provincial Agricultural Extension Project in accordance with the Memorandum of Understanding between the governments of the Philippines and Australia. aisadc It appears that the government of Australia will contribute the amount of A$8.7 million to support the implementation of the Pilot Provincial Agricultural Extension Project which is designed to support the upgrading of extension services and the use of improved production systems by farming, fishing and fish farming communities. The Project will be implemented initially in four provinces Albay and Camarines Sur (Region 5) and Bukidnon and Misamis Oriental (Region 10) with some training and coordination activities at regional and national levels. In reply, please be informed that under Section 88(4), Article VI of the 1987 Constitution of the Philippines, which became effective on February 2, 1987, no law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress. In view of said provision, since the adverted agreement between the Philippines and Australia has not been ratified by the required votes of the Members of the Congress, the aforesaid exemption provision in the Memorandum of Understanding is without force and effect. It means that the suppliers of goods and services are not precluded from passing on or shifting the VAT on their sale of goods and services to the Project. VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue