ITAD BIR Ruling No. 017-17

May 17, 2017 ITAD BIR RULING NO. 017-17 RR No. 4-2017; Articles IX, Sections 32 & 34 (a-c); XII, Sec. 45 (b) (f), ADB-Philippine Agreement Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Attention: AAA ________________ Gentlemen : This refers to your letter dated 16 March 2017 requesting confirmation of the exemption from requirement of securing the issuance of Authority to Release Imported Goods (ATRIGs) for imported automobiles already released from customs custody, of Asian Development Bank (ADB) . In reply, please be informed that Revenue Regulations No. 4-2017 (RR No. 4-2017) 1 which amended certain provisions of Revenue Regulations No. 2-2016, 2 provides as follows: "SECTION 2. AMENDMENTS. Items III and IV of Revenue Regulations No. 2-2016 shall be amended as follows: III. Legal Basis xxx xxx xxx Finally, under the provisions of effective International Agreements and the principle of reciprocity, Recognized International Organizations and Foreign Embassies in the Philippines are exempted from all taxes, hence, the exemption from requirement of securing an ATRIG. IV. When and under what circumstances ATRIG is issued xxx xxx xxx However, Foreign Embassies and Recognized International Organizations are exempt from securing ATRIG pursuant to the principle of reciprocity and international agreements to which the Philippines is a signatory, respectively. In cases where automobiles are subsequently sold, transferred, or exchanged in the Philippines to non-exempt persons, or entities, including the introduction and re-introduction into customs territory of automobiles intended for exclusive use within the freeport zones, the purchaser or transferee, owner/possessor of the automobiles shall be considered as the importer, and shall be liable for the excise tax due on such importation to be computed based on existing issuances. " Relative thereto, Sections 32 and 34, Article IX of the Agreement between the Asian Development Bank and the Government of the Republic of the Philippines Regarding the Headquarters of the Asian Development Bank (ADB-Philippine Agreement) , provide: " ARTICLE IX Property of the Bank and Taxation Section 32 The property of the Bank, wherever located and whomever held, shall be immune from search, requisition, confiscation, expropriation and any other form of interference or taking or foreclosure by executive or legislative action. Section 34 The Bank, its property and its operations and transactions shall be exempt from: (a) all taxation and any obligation for the payment, withholding or collection of any tax or duty. The Bank will not claim exemption from taxes or charges which are no more than payments for public utility services; (b) all customs duties and other levies on any goods, articles, including motor vehicles, spare parts and publications, imported or exported by the Bank for its official use, and any obligation for the payment, withholding or collection of any customs duties. The goods and articles, including vehicles, spare parts and publications imported under such exemption will not be sold in the Republic of the Philippines except under conditions agreed upon with the Government; and (c) all prohibitions and restrictions on imports and exports in respect of goods or articles, including motor vehicles, spare parts and publications intended for the official use of the Bank. " Thus, under the ADB-Philippine Agreement , exemption from taxation and customs duties of ADB , its property, operations and transactions including importation of motor vehicles for its official use and exemption from prohibitions and restrictions on such importation are recognized by the Philippines. Moreover, Section 45, Article XII of ADB-Philippine Agreement states that: " ARTICLE XII Privileges and Immunities of Governors and Other Representatives of Members, Directors, President, Vice President and Others Section 45 Officers and staff of the Bank, including for the purposes of this Article experts and consultants performing missions for the Bank, shall enjoy the following privileges and immunities. (b) Exemption from taxation on or in respect of the salaries and emoluments paid by the Bank subject to the power of the Government to tax its nationals; (f) The right to import, free of duty and other levies, prohibitions and restrictions on imports, their furniture and effects including one automobile, within twelve (12) months after first taking up their post in the Republic of the Philippines, and the same right to import one automobile for replacement (3) years after the last importation. Should the previously imported automobile be sold, conveyed, or transferred, due notice shall be given by the Bank to the Government and delivery shall be made at the place designated by the Government in consultation with the Bank;" In view of the foregoing, ADB's officers and staff who are not Filipino nationals , are exempt from payment of taxes such as excise taxes, and customs duties on the importation of automobiles within 12 months after first taking up their post in the Philippines and during the importation of one automobile for replacement, 3 years after the last importation. However, in the event that the automobiles are subsequently sold, transferred, or exchanged in the Philippines to non-exempt person, or entities, the purchaser or transferee, owner/possessor of the automobiles shall be considered as the importer, and shall be liable for the excise tax due on such importation. Accordingly, ADB, the organization itself, its officers and staff who are not Filipino nationals are exempt from securing ATRIGs. As an additional requirement, ADB should submit annual report of all importations which shall be submitted to the Excise LT Regulatory Division (ELTRD), BIR on or before the fifth (5th) day of January of the following year, which should specify the following: name of importer; address of importer; importer's TIN; quantity/no. of unit; description of imported article(s) such as year model, brand, vehicle identification number/chassis no.; bill of lading/airway bill number, date of issue; name of vessel/carrier and flight/voyage number; value of importation (in US Dollars); purpose of importation; and date released from BOC, pursuant to Section 3 of RR No. 4-2017 . For your information and guidance. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Amending Certain Provisions of Revenue Regulations No. 2-2016. 2. Issuance of Authority to Release Imported Goods (ATRIGs) for Imported Automobiles Already Released from Customs Custody.