BIR Ruling No. 201-82

June 21, 1982 BIR RULING NO. 201-82 202-e 000-00 201-82 Wayang Production PTY. Ltd. Midtown Ramada Hotel Ermita, Manila Attention: Mr . James McElroy Producer S i r : This refers to your letter to the Minister of Finance dated January 28, 1982 which was supplemented by your letter dated March 3, 1982 to this Bureau, requesting the following: cdti 1. Sales tax exemption on your local purchases of building materials, articles and equipment to be used in the construction of a movie set and props; garments, clothing costumes and other necessary paraphernalia for the use of your actors, actresses, extras, and production personnel; 2. Exemption from overseas communications tax for your overseas telephone/telex communications; 3. Exemption from carrier's tax for your airline, inland, and sea travels; in connection with the production of "The Year of Living Dangerously" which you are currently filming in the Philippines. It is represented that you are producing the above-entitled film in the Philippines upon the invitation of the First Lady and that you were encouraged to do so because of the incentives promised to the movie producers in the recent Manila International Film Festival. In reply, please be informed that pertinent portion of Section 202 of the Tax Code, as amended by P.D. 1469, provides as follows: "Sec. 202. Articles not subject to Percentage Tax on Sales . The following shall be exempt from the percentage taxes imposed in Section 194, 195, 196, 197, 198, 199 and 201; "(e) Articles sold by registered export producers to (1) other registered export producers. (2) registered export traders, or (3) foreign tourists or travellers, which are considered as export sales. xxx xxx xxx "Sales to foreign tourists paid for in acceptable foreign currency directly made by manufacturers or producers shall be considered export sales if the articles purchased are actually brought out of the Philippines by the buyers upon their departure." "Tourist is one that travels from place to place for pleasure or culture." (Webster's Third International Dictionary) "The word 'traveler' has no very precise or technical meaning when used without any limitation. Its primary and general import is to pass from place to place, whether for pleasure, instruction, business or health. The length of the journey or its continuance does not destroy the character of the occupation." (42A Words & Phrases P. 20) It is our opinion, and so we hold, that since you came to the Philippines for the purpose of producing the film entitled "The Year of Living Dangerously", and considering your business as producer of films, you do not come within the purview of a foreign traveler or tourist. Accordingly, your local purchases of building materials, articles and equipment to be used in the construction of a movie set and props; garments, clothing costumes and other paraphernalia for the use of your actors, actresses, extras, and production personnel, are not exempt from, but subject to the sales tax. Your request for exemption from overseas communications tax and carrier's tax under Sections 290-A and 207 respectively of the Tax Code, is also denied for lack of legal basis. Very truly yours, RUBEN B. ANCHETA Acting Commissioner