Whether an Importation of One (1) Generator Set by the Rural Bank of Malabon is Exempt from VAT Pursuant to R.A. 7353

October 25, 1995 BIR RULING NO. 169-95 R.A. 7353 101 (c) 000-00 169-95 S.K. Guiamano Cargo Service Corp. TIPSI Bldg. M.D. Tacoma Street Port Area, Manila Attention: Ms . Dolores S . Guiamano Licensed Customs Broker Gentlemen : This refers to your letter dated July 31, 1995, in effect; requesting for a clarification whether an importation of one (1) generator set by your client, Rural Bank of Malabon, is exempt from VAT pursuant to R.A. 7353. cdtech It appears that your client imported from the United Kingdom one (1) generator set described under Proforma Inv. #GTI-010-95 from Guild from Technology Inc. as water cooled diesel phase 4W, 60Hz, 0.8 power factor, 1800 rpm, vertical multi-cylinder, 4 strokes/cycle, turbo-charged imported fully built-up, factory coupled to a MARATHON brushless alternator, permanently aligned complete with standard accessories, and that said generator has a total value, C.I.F. Manila, of U.K.L. 9,230.00. In reply, please be informed that pursuant to Section 15 of R.A. 7353 stating. xxx xxx xxx "Sec. 15. All rural banks created and organized under the provisions of this Act shall be exempt from the payment of all taxes fees and charges of whatever nature and description, except the corporate income tax and local taxes, fees and charges, for a period of five (5) years from the date of commencement of operations." only the taxes that are relevant to the operations of all rural bank are covered by the aforesaid tax exemption clause. It is our opinion that since a generating set is not directly related to your client's banking operations, its importation is not intended for sale, barter, or exchange is a replacement of compensating tax which is imposed on any importation intended for the personal use of the importer. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue