Applicability of VAT on the Exemption of World Food Programme

June 29, 1988 BIR RULING NO. 289-88 103 (u) 289-88 Gentlemen : This refers to your letter dated May 23, 1988, requesting clarification regarding the applicability of VAT on the exemption of World Food Programme. It is represented that you are the sole stevedoring contractor at the South Harbor; that on April 24, 1988, you unloaded 44,400 bags of rice from the vessel MV "Sea Horse" which was a donation from Pakistan for the Philippine Refugee Processing Center; that you billed Trans-World Brokerage Corporation (broker of World Food Programme) stevedoring charges plus 10% value-added tax; and that Trans-World Brokerage Corporation contested the 10% billed tax on the ground that the consignee of the cargo is exempt from all taxes under Section 103(u) of the Tax Code as amended by Executive Order No. 273. In reply, please be informed that although World Food Programme is tax-exempt, you can charge the broker, Trans-World Brokerage Corporation, the 10% value-added tax. The exemption of the consignee from the 10% value-added tax is only limited to the taxes for which it is directly liable. However, while you can pass on the VAT to the broker, it is entirely left to its discretion whether to accept or reject the billing of the 10% value-added tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner