Tax Exemption Privileges of Australian-Hired Contractors Under the Philippines-Australia Agricultural Technology Education Project

January 27, 1997 DILG MEMORANDUM CIRCULAR NO. 019-97 TO : All Provincial Governors, City Mayors, Municipal Mayors and Regional Directors of Regions II, IV, XI and XIII, and Others Concerned SUBJECT : Tax Exemption Privileges of Australian-Hired Contractors Under the Philippines-Australia Agricultural Technology Education Project The Educational Development Projects Implementing Task Force (EDPITAF) of the Department of Education, Culture and Sports is currently implementing the Philippines-Australia Agricultural Technology Education Project, otherwise known as AGRITECH. The Project, under grant from the Government of Australia through the Australian Agency for International Development, aims to improve and re-orient agricultural education services for agricultural development needs of rural communities in Regions II and IV and, with the Project's recent extension to Mindanao, Regions XI and CARAGA. Part of the Grant provides for the construction or refurbishment of agricultural education-related facilities where local contractors, entered into contract with the Australian Technical Advisory Team, undertake the construction works. In the course of Project implementation, EDPITAF called the attention of this Department with respect to the local government units (LGUs) demanding tax payments from the Australian-hired contractors. This practice is violative of the provision of Paragraph 7.1(a) of the Memorandum of Understanding (MOU) executed between the Governments of Australia and the Philippines. The said MOU provides that, insofar as these concern professional and technical material and services, the Government of the Philippines shall: Be responsible for the payment of import duties, Value Added Tax and other duties and taxes imposed in the Philippines; and be responsible for inspection fees, storage charges and other fees and charges levied in the Philippines. In this connection, all LGUs affected in the implementation of the above-mentioned EDPITAF Projects are hereby enjoined to exempt the Australian-hired contractors from the payment of local taxes, fees and charges. All DILG Regional Directors concerned are likewise hereby directed to monitor local government compliance on the intent of this issuance. Please be guided accordingly. (SGD.) ROBERT Z. BARBERS Secretary Department of Interior and Local Government