Exemption Authorized by P.I.-U.S. Military Bases Agreement

May 13, 1959 BIR RULING NO. 256-59 Rosal Engineering 511-515 Sales Quiapo, Manila Gentlemen : In reply to your letter dated January 6, 1959, I have the honor to inform you as follows: Pursuant to the P.I.-U.S. Military Bases Agreement as supplemented by the exchange of notes between the Philippine and U.S. Governments on December 29, 1952, any person or entity who, by virtue of a contract with an authorized contractor of the U.S. Military Bases, supplies labor and supervises the construction works in the said Bases is exempt from the 3% tax prescribed in section 191 of the Tax Code provided that the said contract (sub-contract) is authorized by the aforesaid Bases. In absence of such authorization by the U.S. Bases, no exemption lies. Accordingly, if your sub-contract is authorized by the U.S. Naval Base at Subic Bay, you are exempt from the 3% contractor's tax; otherwise, you are liable thereto. In this connection, however, it is stated that even if you meet all the requisites for exemption from the 3% contractor's tax under the said Agreement, nevertheless, you remain subject to the income and basic residence taxes and, in proper cases, the additional residence tax as well as all other taxes not covered by the aforesaid Agreement. casia Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue