VAT Ruling No. 001-89

January 2, 1989 VAT RULING NO. 001-89 Summa Kumagai Inc. 115 Esteban Street, Legaspi Village Makati, Metro Manila Attention: Mr . Teodoro A . Legaspi President S i r s : This refers to your application for zero rate of your contracting services as a domestic corporation with the Japan International Cooperation Agency (JICA) for the construction of a trial farm in Diversified Crops Irrigation Engineering Project (DCIEP), a project undertaken on the basis of the Exchange of Notes dated November 24, 1987 and December 2, 1987 between the Government of the Republic of the Philippines and the Government of Japan. The pertinent provisions of the aforesaid Exchange of Notes state that: "The Government of the Republic of the Philippines will, itself or through its executing agencies or instrumentalities, assume all fiscal levies or taxes imposed in the Republic of the Philippines on Japanese firms or nationals operating as suppliers, contractors or consultants on and /or in connection with any income that may accrue from the supply of products and/or service to be provided under the loan". (Emphasis provided) It is therefore clear from the foregoing provisions that the tax exemption is limited only to Japanese firms and nationals; hence, the tax exemption cannot be claimed by a domestic corporation such as yours. Such being the case, effective zero-rating of your contracting services cannot be granted. cdta Very truly yours, JOSE U. ONG Commissioner of Internal Revenue