VAT at 0% on Local Purchases of Construction Materials

August 9, 1988 BIR RULING NO. 385-88 100-a 000-00 385-88 Gentlemen : This refers to your local purchases of construction materials needed/required for the New Headquarters Building Project of the Asian Development Bank (ADB). It appears that under the Supplementary Agreement to the agreement between the Asian Development Bank and the Government of the Republic of the Philippines regarding the Headquarters of the Asian Development Bank as ratified by the President of the Philippines on February 25, 1985 and the Memorandum of Understanding between the Government of the Republic of the Philippines and the Asian Development Bank as ratified by the President of the Philippines on July 24, 1985 and as implemented by Ministry Order No. 1-86 of the Ministry (now Department) of Finance, all local purchases made by the Bank or its contractor or sub-contractor of supplies to be used in the Project are exempt from sales tax, provided that the Special Project Officer of the Bank issues a certificate concerning the use of such specific item purchased, the same to be furnished the Ministry (now Department) of Finance through PCC/ADB. In view of the foregoing, your local purchases of materials certified to by the Special Project Officer of the Bank under Certificate of Project Goods No. 17 dated February 8, 1988 (Local Purchase with Sales Tax Exemption) as needed for the construction of the Asian Development Bank Headquarters shall be subject to VAT at 0%, pursuant to Section 8(b)(2) of Revenue Regulations No. 5-87 implementing Section 100(a)(2) of the Tax Code, as amended by Executive Order No. 273; provided the seller is VAT-registered and that it applied for zero rating pursuant to Section 8(d) of said regulations. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner