10% VAT on the Shipment of Multi-Channel Music Link

July 1, 1988 BIR RULING NO. 293-88 101 (a) 000-00 293-88 Gentlemen : This refers to your letter dated June 9, 1988 requesting reconsideration of B.I.R. Ruling No. 167-88 denying your request for exemption from VAT a shipment of Multi-Channel Music Link which arrived on February 9, 1988. In support thereof, you cited the fact that on August 6, 1987, the Fiscal Incentives Review Board (FIRB) issued Resolution No. 26-87 stating in this wise: "Be it resolved, as it is hereby resolved, that the privilege of importations of radio equipment, spare parts and allied materials actually , directly and exclusively used by the Radio Veritas, in its operations without the prepayment of taxes, customs duties and other similar charges due thereon, the same to be offset from whatever amount is due to the Radio Veritas for the facilities and broadcast time which has been used officially by the government , is restored effective March 10, 1987. "Be it further resolved, as it is hereby resolved, That for purposes of ensuring the proper offset of taxes, duties, and other similar charges for the facilities and broadcast time used by the government, the Radio Veritas shall render a detailed report of such offset to the FIRB on a quarterly basis or as often as may be required by the FIRB to ensure effective incentive availment, until such time that the appropriate government agency therefore has been designated." (Emphasis supplied) In reply, please be informed that the foregoing FIRB Resolution was issued on the same date that the Secretary of Justice issued also Opinion No. 77-87, declaring unconstitutional FIRB's power to restore tax incentives. Such being the case, said FIRB Resolution could not have been affected by the Opinion of the Secretary of Justice. Accordingly, BIR Ruling No. 167-88 is hereby modified in the sense that the aforesaid shipment of Multi-Channel Music Link shall be subject to VAT at 10% based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties excise taxes, if any, and other charges pursuant to section 101(a) of the Tax Code, as amended by Executive Order No. 273. However, instead of collecting the VAT due; it shall be offset against your billings to the National Government for airtime used by the latter in your broadcasting station, pursuant to the aforesaid FIRB Resolution. For this purpose, you shall be informed of the total value-added tax due on your importation against which your future billings for actual airtime used by the Government will be charged. Moreover, you are to render a detailed report of such offset to the BIR on a quarterly basis. cdtech This serves as your authority to secure the release of the aforesaid shipment of Multi-Channel Music Link from customs authorities without the payment of VAT. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner