ITAD Ruling No. 080-00

July 25, 2000 ITAD RULING NO. 080-00 Sec. 108 Sec. 109 104-89 Asian Development Bank 6 ADB Avenue, Mandaluyong City 0401 Metro Manila Attention: Mr . Normin S . Pakpahan Manager, General Services Division Gentlemen : This refers to your letter dated May 02, 2000, requesting certification of the Asian Development Bank's (ADB) exemption from the payment/collection by the Philippine Government of value-added tax (VAT), to be used exclusively by ADB to facilitate its claim for refund of UK VAT collected by HM Customs and Excise of Northern Ireland from an ADB's professional staff member who was officially sent as a participant in the Oxford Strategic Leadership Program at Templeton College, Oxford, England. In reply, please be informed that under Executive Order (EO) No. 161 promulgated April 21, 1987, the pertinent portion of which provides, viz: "xxx xxx xxx "SEC. 1. Provisions of the National Internal Revenue Code, as amended, to the contrary notwithstanding: (a) goods sold directly to the Asian Development Bank shall not be subject to sales tax, and (b) services rendered under contracts entered into with the Asian Development Bank shall not be subject to contractors tax. xxx xxx xxx" ADB is exempt from sales tax on its purchase of goods and from contractors tax on its purchase of services. With the promulgation of EO No. 273 which took effect January 01, 1988 designed to simplify tax on sale of goods and services, the sales and contractors tax and other business taxes were abolished and were replaced by VAT. In the light of these developments, it is understood that the grant of exemption from the sales and contractors tax entitles the grantee like exemption from VAT which merely replaced these taxes. (BIR Ruling 104-89 dated May 16, 1989) In fine, since ADB is exempt from the old sales and contractors tax, it is likewise exempt from VAT. This ruling serves as the Bureau's certification that the Asian Development Bank is exempt from VAT on its purchase of goods and services. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group