VAT Imposed on the Shipment of Drilling Machinery/Equipment

July 6, 1988 BIR RULING NO. 299-88 101, 103 000-00 299-88 Gentlemen : This refers to your letter dated June 1, 1988 which was referred to this Office by the Secretary of Finance relative to your request for the exemption of the Tulungan sa Tubigan Foundation, Inc. (TST) from VAT on its shipment of drilling machinery/equipment complete with accessories still in the custody of the Bureau of Customs pending payment of the corresponding value-added tax. You have represented that the said foundation is one of the collaborating agencies of the Presidential Commission for the Urban Poor (PCUP) which is currently involved in the implementation of the Community Water Improvement Program (CWIP) for Tala, Caloocan City; that said project is designed to construct several units of deepwell for the benefit of some 12,000 urban poor residents; and that the drilling equipment will be used not in the Tala projects but also in other projects to be implemented jointly by PCUP and TST. In reply, please be informed that the value-added tax is imposed on every importation of goods whether for use in business or not. The only importations which are exempt from the value-added tax are those enumerated in Section 103 pars. (b), (c), (d), (e), (g), (h), and (i) of the Tax Code, as amended by Executive Order No. 273. Such being the case, the shipment of the drilling machinery/equipment in question, even if it is donated by the Swedish Agency for International Technical and Economical Cooperation (BITS) is subject to the value-added tax imposed by Section 101 of the Tax Code as amended. You cannot invoke Presidential Proclamation No. 169 for the reason that the exemption from income, gift, amusement and all other taxes granted therefrom covers only the donations and contributions in connection with the TST's national educational and fund campaign. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner