Subic Air, Inc.

April 26, 2021 BIR RULING NO. VAT-138-21 Section 109 (1) (T) of the Tax Code of 1997, as amended; BIR Ruling No. 1049-2018 Subic Air, Inc. Hangar Building 8324, International Airport, Subic Bay Freeport Zone, Subic, Zambales Attention: AAA _______________ Gentlemen : This refers to your request on behalf of Subic Air, Inc. 1 for tax exemption on the sale of five (5) aircrafts, pursuant to Section 109 (1) (T) of the National Internal Revenue Code (Tax Code) of 1997, as amended. It is represented that Subic Air, Inc., with Taxpayer Identification Number (TIN) 000-000-000-000 is a domestic corporation organized and registered with the Securities and Exchange Commission (SEC) under Company Registration No. ASO95-005702; that it is a licensed aircraft operator thru its Air Operator Certificate (AOC) issued by the Civil Aviation Authority of the Philippines (CAAP), authorized to perform commercial air operations subject to restrictions on area of operations and special limitations as defined in its Operations Manual and Part 9 of the Philippines Civil Aviation Regulations, series of 2008; that it is desirous in acquiring five (5) aircrafts currently owned by World Aviation Corporation (WAC) with the following descriptions: Registry Manufacturer Model/Serial RP-C4926 AIRBUS HELICOPTERS EC130B4/SN:4936 RP-C3088 ROBINSON HELICOPTER COMPANY R44 II/SN:12719 RP-C2226 TEXTRON AVIATION B300/SN:FL-563 RP-C2222 AIRBUS HELICOPTERS AS365N3/SN:6440 RP-C8226 AIRBUS HELICOPTERS EC145/SN:9274 and that on March 22, 2021, the Civil Aeronautics Board (CAB) granted the request of Subic Air, Inc. for the provisional extension of its Certificate of Public Convenience and Necessity (CPCN) to operate Domestic Non-Scheduled (air taxi) Air Transportation Services valid for a period of one (1) month from March 27, 2021 until April 26, 2021. In reply, please be informed that Section 109 (1) (T) of the Tax Code of 1997, as amended, provides as follows: AIDSTE "SEC. 109. Exempt Transactions. (1) Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from the value-added tax. xxx xxx xxx (T) 2 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 sale, importation or lease of an aircraft destined for domestic transport or international transport operations shall be exempt from value added tax (VAT). In relation thereto, Section 4.109-1 (B) (1) (t) of Revenue Regulations (RR) No. 16-2005, as amended, which implements the above-quoted provision, states that: "SECTION 4.109-1. VAT-Exempt Transactions. x x x (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 Maritime Industry Authority (MARINA)." Accordingly, the acquisition of five (5) aircrafts with Aircraft Model/Serial Nos. EC130B4/SN:4936, R44 II/SN:12719, B300/SN:FL-563, AS365N3/SN:6440, and EC145/SN:9274 by Subic Air, Inc. for its domestic non-scheduled (air taxi) air transportation services is exempt from the payment of VAT. 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. AaCTcI Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Formerly: Subic International Air Charter, Inc. 2. Renumbered by Republic Act (RA) No. 10378.