BIR Ruling [UN-325-95]

September 6, 1995 BIR RULING [UN-325-95] Hon. Milwida M. Guevara Undersecretary of Finance Department of Finance Manila M a d a m : This refers to your letter dated August 7, 1995, requesting our comments and recommendations on Draft House Bill entitled: "An Act To Spur The Planting Of A Billion Trees, Establishing Mini-Forest Parks In All Cities And Municipalities, Protecting The Remaining Natural Forest And Forest Plantations, And Creating A Fund Therefor, And For Other Purposes". The proposed bill seeks to grant incentives as follows: "SEC. 11. Other Incentives . FLMs shall enjoy the following benefits: cdll "f) Exemption from forest charges. FLMs and awardees of other people-oriented forestry programs shall be exempted from paying taxes on revenue from reforested and protected areas". "xxx xxx xxx" "SEC. 17. Development of Private Forestry and Incentives . "c) Exemption from forest charges under RA 7161 and Value-Added Tax (VAT) for the sale, barter or exchange of timber and forest products, and from real property tax under PD 853 or PD 464 as amended". "xxx xxx xxx" Hereunder are our comments and recommendations on the aforestated tax incentives under the proposed bill: 1. Section 11(f) of the draft bill does not specify the kind of tax/es FLMs and awardees of other people-oriented forestry programs are exempt from paying. It does not also prescribe the conditions for the grant of exemption and the duration of the tax exemption privileges. In short, the proposed exemption is too broad and without any limitations, hence, we do not endorse this particular portion of the bill. 2. The provision exempting private landowners who shall plant forest trees in their lands from VAT for the sale, barter or exchange of timber and forest products under Section 17(c) of the draft bill, is no longer necessary, Section 103(a) of the Tax Code, as amended by E.O. No. 273 already provides that the sale of forest products in their original state by the primary producer or owner of the land where the same are produced shall be exempt from the value-added tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue