Sales Tax Exemption on Local Purchases of Materials Occurred Prior to the Effectivity of the VAT Law

September 15, 1988 BIR RULING NO. 445-88 163 284-87 445-88 Gentlemen : This refers to your local purchases of construction materials needed/required for the New Headquarters Building Project of the Asian Development Bank (ADB) as certified to by the Special Project Officer of said Bank under Certificate of Project Goods No. 11, 12 and 13 dated August 5, September 16 and October 9, 1987, respectively, and transmitted to this Office by the Acting Chief, Finance Revenue Service in his 1st Endorsement dated November 5, 1987. 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 thru PCG/ADB. In view of the foregoing, your above local purchases of materials which occurred prior to the effectivity of the VAT law on January 1, 1988 are exempt from the sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner