Foreign Supervisory Personnel of a Foreign Company Contracted by NEA are Exempt from Individual Income Tax

December 8, 1981 BIR RULING NO. 265-81 024-a 129-81 265-81 National Electrification Administration D & E Building, Quezon Avenue Quezon City Attention: Mr . Pedro G . Dumol Administrator Gentlemen : This refers to your letter dated July 30, 1981, requesting confirmation to the effect that Balfour Beatty Engineering Limited (BBEL) as well as its foreign supervisory personnel are exempt from all taxes pursuant to Presidential Decree No. 269, otherwise known as National Electrification Administration (NEA) Charter as amended by Presidential Decree No. 1645. It is represented that you entered into two (2) contracts with BBEL a foreign company organized and existing under and by virtue of the laws of England; that the first contract is for the supply of machinery, equipment and materials, and associated services for the construction of small hydro electric stations in various Philippine locations for rural electrification; that under both contracts, NEA has agreed to shoulder all taxes, charges and duties levied or that might be levied by the Philippine government on BBEL; and that part of the loan proceeds contracted by NEA from foreign financing institutions will be used to pay for machinery, equipment, materials and services of BBEL and its foreign supervisory personnel pursuant to the two (2) contracts entered into by NEA. In reply thereto, I have the honor to inform you that pursuant to Section 3(b) of Presidential Decree No. 269 as amended by Presidential Decree No. 1645, any importation of machinery, equipment, materials, supplies and services by NEA paid from the proceeds, of any indebtedness contracted under said Section 8(b) shall be exempt from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or by any authority, branch, division, or political subdivision thereof. Accordingly, under the aforecited provisions of the NEA charter, the importation of machinery, equipment, materials, supplies and services paid from the proceeds of the foreign loan contracted by NEA is exempt from all taxes, imposts and fees on the imported materials and services. Likewise, its foreign supervisory personnel are exempt from individual income tax. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner