Denial of Request for Tax Exemption of Donated Religious Statues/Articles from Italy

November 12, 1999 BIR RULING NO. 175-99 107 (A)-000-00-175-99 Hon . Ma . Eleanor F . dela Cruz Assistant Secretary Department of Finance Manila M a d a m : This refers to your letter dated September 2, 1999 requesting on behalf of Sis. Ma. Gabriela de Anda of the Siervas de Jesus, Sociedad Espanola de Beneficencia for exemption from the payment of taxes and duty-free entry of the shipment of donated works of art (religious statues/articles). cdlex It is represented that Sociedad Espanola de Beneficencia is the recipient of five (5) cartons stc. donated religious statues/articles covered by Air Waybill No. 176/9401 5460 coming from Rome, Italy; that the Deputy Executive Director of the United Nations Educational, Scientific and Cultural Organization - National Commission of the Philippines has certified that the said importation may qualify for tax and duty exemption pursuant to the provisions of the UNESCO Florence Agreement under Annex B (iii) works of art; and that the Revenue Operations Group of the Department of Finance has endorsed the release of the shipment duty free but subject to the payment of value-added tax (VAT). In reply, please be informed that Annex B (iii) of the UNESCO Florence Agreement, provides, viz: "(iii) Original works of art of statuary or sculpture, whether in the round, in relief, or in intaglio, excluding mass-produced reproductions and works of conventional craftsmanship of a commercial character." It is noted however, that the aforesaid religious statues/articles are not original works of art of statuary or sculpture but common items of a commercial character. Moreover, the indorsement from the Department of Finance specifically states that such shipment of religious statues/articles ''may be released duty-free . . . but subject to the payment of the value-added tax (VAT) imposed under the National Internal Revenue Code . . .". Clearly, the exemption from VAT of such importation was never the declared intention of the Department of Finance, the competent authority in this country which validates the tax exemption privilege of a taxpayer. Accordingly, it is regretted that the request of the Sociedad Espanola de Beneficencia for the exemption from the payment of VAT of the donated religious statues/articles from Italy cannot be granted for lack of legal basis. Needless to state, tax exemptions are strictly construed and that the exemption will not be held to be conferred unless the terms under which it is granted clearly and distinctly show that such was the intention of the parties. (Phil. Acetylene Co., Inc. vs. Commissioner, 20 SCRA 1056; Surigao Consolidated Mining Co. vs. Collector, L-14878, December 26, 1963). Exemptions from taxation are highly disfavored in law and he who claims an exemption must be able to justify his claim by the clearest grant or organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications. (Asiatic Petroleum Co. vs. Llamas, 49 Phil. 466; Davao Light and Power Co., Inc. vs. Comm. Of Customs, L-28731, 28902, March 29, 1972). cdlex This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue