ITAD BIR Ruling No. 118-12

March 12, 2012 ITAD BIR RULING NO. 118-12 Article VI (Immunity from Taxation), Philippines-UNICEF Agreement Concerning the Activities of the UNICEF; BIR Ruling No. 41-98 Goetz Moving and Storage, Inc. Goetz Cargo Center 16 Villonco Drive South Bay, Paraaque City Attention: Francisoc A. Medrano Internal Auditor Gentlemen : This refers to your letter dated August 25, 2011 inquiring whether the United Nations International Children's Emergency Fund ("UNICEF") is exempt from value-added tax ("VAT"),particularly, on transportation services provided to it by the Philippine Airlines ("PAL"). Relative thereto, please be informed that under Section 109 (K) of the National Internal Revenue Code of 1997, as amended, certain transactions are exempt from VAT if they are so exempt under international agreements to which the Philippines is a signatory or under special laws, to wit: "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;" With respect to international agreement, we cite the Agreement between the UNICEF and the Government of the Philippines Concerning the Activities of the UNICEF in the Philippines. 1 Subparagraph (a),Article VI thereof provides: cADaIH "Article VI IMMUNITY FROM TAXATION (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 Republic of the Philippines. The Fund shall also be immune from liability for the collection or payment of any tax, fee, toll, or other duty imposed by the Government or any political sub-division thereof or by any other public authority." (Emphasis ours) Accordingly, since 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, this Office confirms that transactions entered into by UNICEF fall within the meaning of transactions covered under Section 109 (K) of the Tax Code. Hence, transportation services provided by PAL to UNICEF shall be exempt from VAT pursuant to subparagraph (a),Article VI of the subject Agreement. 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 at Paris, France, on November 20, 1948.