Australian Embassy

June 4, 2019 ITAD BIR RULING NO. 013-19 Secs. 106, 108 and 109, NIRC of 1997, as amended; Articles 5 & 7, GADC between GPH and GA; Section 15.1, SA; Exchange of Letters between GA and GPH Australian Embassy 23rd Floor, Tower 2, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Gentlemen : This refers to your Note No. 186/19 dated 10 April 2019, which was indorsed by the Department of Foreign Affairs, requesting for a four-year extension of the value-added tax ("VAT") exemption of Abt JTA Pty Ltd. (" AJPL "),acting as managing contractor of the Investing in Women Initiative (" IWI ") activity, as confirmed by the Bureau of Internal Revenue (BIR) through its issuance of BIR Ruling No. ITAD-083-18 dated 07 September 2018. It is represented herein that the BIR confirmed the grant of VAT exemption to AJPL in connection with program supplies, professional and technical materials and services provided for or procured for the implementation of the activities under the IWI ,pursuant to the Subsidiary Arrangement Between the Government of Australia (" GA ") and the Government of the Republic of the Philippines (" GPH ") Relating to the IWI (" SA ") dated 24 June 2016, in connection with the General Agreement on Development Cooperation between the Government of the Republic of the Philippines and the Government of Australia (" GADC ");that Section 15.1 of the SA provides that the " Subsidiary Arrangement may be amended at any time through an Exchange of Letters signed by the Parties ";that pursuant to the said Section 15.1 of the SA ,the GA ,in a letter dated 21 February 2019 of Australian Ambassador AAA, proposed to amend Clause 5.1 of the SA by replacing 4 years with 8 years within which to implement the activity ;that the GPH ,in a letter dated 4 March 2019 of Department of Social Welfare and Development Secretary BBB, as the GPH representative to the SA ,confirmed acceptance of the GA 's proposal; that finally, the said communication between the GA and the GPH constituted the Exchange of Letters between the Parties. In reply, please be informed that, as already confirmed in BIR Ruling No. ITAD-083-18, all program supplies, professional and technical material and services procured within the Philippines by AJPL for the implementation of the IWI shall be subject to VAT at zero percent (0%) rate pursuant to paragraph 1 (a),Article 7 of the GADC , in relation to Sections 106 (A) (2) (b) and 108 (B) (3) of the National Internal Revenue Code (NIRC) of 1997, as amended. Moreover, the direct importation of AJPL in connection with IWI shall be VAT-exempt pursuant to paragraph 1 (a),Article 7 of the GADC , in relation to Section 109 (1) (K) of the NIRC. Furthermore, in view of the Exchange of Letters between the GA and the GPH which extended the period of implementation of the activity to 8 years, this Office confirms as it hereby rules that the grant of VAT exemption to AJPL in connection with the IWI shall cover the entire duration of the activity, i.e. ,8 (eight) years from 24 June 2016. This privilege, however, shall be limited to the purchase of goods and services and importation necessary to implement the IWI and GADC ,and cannot be claimed by AJPL for any other purpose notwithstanding its designation as the managing contractor. This ruling supplements BIR Ruling No. ITAD-083-18 and is issued based on the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue