Tax Liabilities of Contractor under the RP-JICA Agreement on the Institute for Tropical Medicine in the Phil. Project

September 30, 1985 BIR RULING NO. 171-85 205 000-00 171-85 Gentlemen : This refers to your letter dated June 13, 1985 requesting information on your tax liabilities as contractor under the Agreement between the Republic of the Philippines and the Japan International Cooperation Agency (JICA) of Japan on the Technical Cooperation Project for the Institute for Tropical Medicine in the Philippines. It appears that under the aforesaid Agreement the Government of Japan will take necessary measures through JICA to provide at its own expense such machinery, equipment and other materials necessary for the implementation of the Project through the normal procedure under the Colombo Plan Technical Cooperation Scheme, while the Government of the Republic of the Philippines will take necessary measures to meet customs duties, internal revenue taxes and any other charges imposed on said imported articles; that the Government of the Republic of the Philippines will take the necessary measures to provide at its own expense land, buildings and facilities to the Project; and that your company undertook the construction of the Animal Experimental Laboratory at Research Institute for Tropical Medicine which was completed during the first quarter of 1985. In reply, please be informed that based on the foregoing facts, you are subject to the annual fixed tax of P100.00 and to the 4% contractor's tax respectively prescribed in Sections 192(1) and 205 of the Tax Code, as amended. Moreover, you are subject to income tax on the income you derived in undertaking the construction of the project. The taxes which the Republic of the Philippines agreed to meet under the Agreement refer to the customs duties, internal revenue taxes and other charges on the machinery, equipment and other materials that will be sent by JICA to the Philippines. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner