Japan International Cooperation Agency

May 30, 2018 DA ITAD BIR RULING NO. 020-18 Section 106 (A) (2) (b), Tax Code; Article XI (2) (2b), PH-Japan TCA; BIR Ruling No. ITAD-010-17 Japan International Cooperation Agency 40th Floor Yuchengco Tower, RCBC Plaza Ayala Avenue, Makati City Gentlemen : This refers to your Note No. 123-18 dated 27 April 2018, referred to this office by the Department of Finance and the Department of Foreign Affairs, requesting exemption from the payment of value-added (VAT) and ad valorem taxes on the local purchase of a motor vehicle for the official use of the Japan International Cooperation Agency (JICA), specifically described, as follows: HEITAD Type of use: Official Make: Toyota Hiace S Grandia 3.0L Dsl A/T 1T-ZO-023 Model year: 2018 Color: White Pearl Frame number: JTFRT13P1J8024606 Engine number: 1KD2794522 In reply, please be informed of Section 106 (A) (2) (b) of the National Internal Revenue Code of 1997, as amended (Tax Code), which provides: "SEC. 106. Value-Added Tax on Sale of Goods or Properties. xxx xxx xxx (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: xxx xxx xxx (b) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate. x x x" Based on the foregoing, the sale of goods by VAT-registered entities to JICA, can be subject to VAT at zero percent (0%) rate pursuant to Section 106 (A) (2) (b) of the Tax Code, if a special law or an international agreement effectively subjects such sale of goods to zero rate. In connection thereto, there is the Agreement on Technical Cooperation between the Government of the Republic of the Philippines and the Government of Japan 1 (PH-Japan TCA). Its Article XI (2) (2b) provides, as follows: "Article XI xxx xxx xxx 2. The Government of the Republic of the Philippines shall: xxx xxx xxx (2) (b) exempt the Office from taxes including value added tax and fiscal charges in respect of the local purchase of the equipment, machinery, motor vehicles, materials and professional and technical services necessary for the functions of the Office; x x x" Based on the foregoing, tax exemption privileges are accorded by the Philippine Government to the JICA Office in the Philippines, on its local purchase of motor vehicles which are necessary for its functions. In view thereof, this Office is of the opinion that the JICA Office in the Philippines is exempt from ad valorem tax and subject to zero percent (0%) VAT on its local purchase of a 2018 Toyota Hiace S Grandia 3.0L Dsl A/T 1T-ZO-023, for its official use, pursuant to Section 106 (A) (2) (b) of the Tax Code, in relation to Article XI (2) (2b) of the PH-Japan TCA. (BIR Ruling No. ITAD-010-17 dated March 6, 2017) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. ATICcS Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO Head Revenue Executive Assistant Legal Service Footnotes 1. Ratified by the Philippine President on 23 December 2010; concurred to by the Philippine Senate in its Resolution No. 36 adopted on 14 March 2011; entered into force on 08 April 2011 upon receipt by the Government of Japan of the Philippine notification as conveyed by the Embassy of Japan in its Note Verbale dated 08 April 2011.