Via Marine Corporation

September 6, 2017 BIR RULING NO. 433-17 Section 109 (1) (T) of the 1997 Tax Code, as amended; Revenue Regulations No. 15-2015; BIR Ruling No. 092-2016 Via Marine Corporation C3 Road cor. North Bay Blvd. Navotas, Metro Manila Attention: AAA _______________ Gentlemen : This refers to your letter dated August 27, 2015, requesting on behalf of Via Marine Corporation , for a Certificate of Value-Added Tax (VAT) Exemption on its importation of the 2012-built 2,998.00 GT Oil Tanker named, M/T "Many One," pursuant to Section 109 (1) (T) of the National Internal Revenue Code (NIRC) of 1997, as amended. Documents submitted show that Via Marine Corporation is a domestic corporation registered with the Securities and Exchange Commission (SEC) under Company Registration No. 108024; that it is duly accredited by the Maritime Industry Authority (MARINA) to engage in domestic shipping business per MARINA Certificate No. DSS-2006-003-099 (2015) dated October 14, 2015 valid until November 17, 2018; and that Via Marine Corporation is currently importing a 2012 built 2,998 GT Oil Tanker named "Many One" which is particularly described as follows: Vessel's Name M/T "MANY ONE" IMO Number 9624407 Class Notation HULL MACH, Oil Tanker ESP, Unrestricted Navigation, In Water Survey, VCS Year of Build 2012 Builder/Yard Yangzhou Kejin Shipyard Co. Ltd. China Flag Panama Place of Registration Panama GT/NT 2,998/1,336 that MARINA has approved the importation of the above vessel in its letter dated July 30, 2015; and that per Sworn Statement dated October 21, 2015 executed by AAA, ___________ of Via Marine Corporation ,the subject vessel cannot be manufactured domestically in sufficient quantity and comparable quality and at a reasonable price, and that it is reasonably needed and will be used exclusively by the company in its operations. In reply, please be informed that Section 109 (1) (T) of the NIRC of 1997, as amended, provides as follows: " Sec. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. (T) 1 Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations." Based on the above-cited provision, the importation, among others, of a cargo vessel destined for domestic transport operations shall be exempt from VAT. In relation thereto, Section 4.109-1 (B) (1) (t) of the Revenue Regulations (RR) No. 16-2005, as amended by RR No. 15-2015, which implements the above-quoted provision, provides: "SECTION 4.109-1. VAT-Exempt Transactions. xxx xxx xxx (B) Exempt transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT: xxx xxx xxx (t) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations; Provided, however, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA." It is noted that M/T "Many One" is a 2012-built vessel and has been issued by MARINA with the required authority to be imported. Hence, the importation of the said vessel by Via Marine Corporation is deemed compliant with the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA. Accordingly, the importation by Via Marine Corporation of M/T "Many One" shall be exempt from VAT pursuant to Section 109 (1) (T) of the NIRC of 1997, as amended. The VAT exemption, however, shall be subject to the strict compliance of the conditions contained in the letter of approval issued by MARINA for the importation of the subject vessel. aDSIHc This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, CAESAR R. DULAY Commissioner of Internal Revenue (SGD.) CELIA C. KING Deputy Commissioner Resource Management Group Officer-in-Charge Footnotes 1. Renumbered by Republic Act No. 10378.