ITAD BIR Ruling No. 013-14

January 24, 2014 ITAD BIR RULING NO. 013-14 Sec. 106 (A) (2) (c), 1997 NIRC, as amended; Article VI (A), PH-UNICEF Agreement United Nations Children's Fund 31st Floor, Yuchengco Tower RCBC Plaza, 6819 Ayala Avenue 1200, Makati City Attention: Anselme C. Motcho Chief of Operations Gentlemen : This refers to your letter dated December 13, 2013 indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting exemption from value-added tax (VAT) on the local purchase of ten (10) units of motor vehicle for the official use of the United Nations Children's Fund (UNICEF), specifically described as follows: Make Model Color Chassis No. Engine No. Honda Motorcycle, 2013 Blue KYA00032302 KYA00E032311 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032360 KYA00E032362 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032344 KYA00E032302 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032473 KYA00E032485 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00013651 KYA00E013684 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00013675 KYA00E013631 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032387 KYA00E032391 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032439 KYA00E032451 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032458 KYA00E032470 150 cc. petrol engine Honda Motorcycle, 2013 Blue KYA00032341 KYA00E032348 150 cc. petrol engine In reply, please be informed of Section 109 (1) (K) of the 1997 National Internal Revenue Code (NIRC), as amended, which provides as follows: cDSAEI "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 (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" Moreover, Section 106 (A) (2) (c) of the National Internal Revenue Code (Tax Code) of 1997 as amended, provides, viz. : "SEC. 106. Value-Added Tax on Sale of Goods or Properties. (A) Rate and Base of Tax . There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value-added tax equivalent to ten percent (10%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor: Provided, xxx xxx xxx (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: xxx xxx xxx (c) 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." Relative thereto, Article VI, Paragraph A of the Agreement between the United Nations Children's Fund and the Government of the Republic of the Philippines 1 (PH-UNICEF Agreement), provides, viz. : "Article VI Immunity from Taxation xxx xxx xxx (A) The Fund, its assets, property, income and its operations and transactions of whatever nature shall be immune from all taxes, fees, tolls, or duties imposed by the government or by any political sub-division thereof or by any other public authority in the Philippines. The Fund shall also be immune from liability for the collection of payment of any tax, fee, toll, or duty imposed by the Government or by any political sub-division thereof or by any other public authority. . . ." cCTaSH Based on the foregoing, UNICEF, its assets, property, income, operations and transactions are immune from all taxes imposed by the Philippine Government or by any political subdivision or public authority in the Philippines. Such being the case, this Office confirms that the sale of ten (10) units 2013 Honda Motorcycle, 150 cc. petrol engine by the VAT-registered local car dealer for the official use of UNICEF, an exempt entity pursuant to Section 109 (K) of the 1997 NIRC, as amended, and the PH-UNICEF Agreement shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (c) of the 1997 NIRC, as amended. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Signed on November 20, 1948.