ITAD Ruling No. 096-00

August 2, 2000 ITAD RULING NO. 096-00 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 January 17, 2000, requesting our Office to re-issue and validate our letter dated November 29, 1989 regarding Asian Development Bank's (ADB) exemption from the payment of value-added tax (VAT). 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 then 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 & Inspection Group