VAT Ruling No. 008-98

1998 VAT RULING NO. 008-98 Sec. 103 (q)-000-00-008-98 Department of Foreign Affairs Manila Attention: Hon . Jose U . Fernandez Assistant Secretary Gentlemen : This refers to your faxed letter dated October 1, 1997 requesting for and on behalf of the United Nations Development Program and the other international organizations under the United Nations System, exemption from the value-added tax (VAT) on their local purchases and/or importations. It is represented that the United Nations Agencies based in the Philippines enjoy privileges, exemptions and immunities which the Government of the Philippines recognizes pursuant to the Charter of the United Nations adopted by the General Assembly on 13 February 1946, and the Convention of the Privileges and Immunities of Specialized Agencies of the United Nations adopted by the UN General Assembly on 21 November 1947, Section 10 of which provides, and we quote "While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless, when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the duty of tax." cdll It is represented further that Philippine national interest would be served by a provision of administrative arrangements for a remission or a return of the VAT in favor of the UN and its related offices in Manila and, invoking the above-quoted provision of an international agreement, you are recommending a special and effective administrative arrangements in favor of the UN and its related organizations operating in Manila through the grant of VAT exemption. In reply, please be informed that under Section 103(q) of the Tax Code, as amended, "Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree Nos. 66, 529, and 1590, are exempt from the value-added tax." Such being the case and since the Philippines is a member of the United Nations and a signatory to the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations adopted by the General Assembly on 21 November 1947, the United Nations and its related organizations operating in the Philippines shall be exempt from the VAT on their importations and purchases of important movable and immovable properties for official use. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue