VAT Ruling No. 015-01

March 28, 2001 VAT RULING NO. 015-01 Jiwa Philippines Incorporated Unit H Times Square Bldg. 8145 Dr. A. Santos Avenue Sucat, Paraaque City Attention: Mr . See Hock Heng President Gentlemen : This refers to your letter dated October 2, 2000 requesting for exemption from the payment of value added tax for your seafreight shipment of 500 catalogues from Singapore. It is represented that you are one of the sponsors/exhibitors in the forthcoming industrial exhibits of the Philippine Society of Mechanical Engineers (PSME) 48th Annual National Convention which will be held at Waterfront Hotel, Lahug, Cebu City on October 18-21, 2000 and that said shipment is equivalent to 2.750 kgs. To be distributed to all convention delegates free of charge and has no commercial value. In reply, please be informed that pursuant to Section 107(A) of the Tax Code of 1997, "there shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any." To constitute importation, there must exist an intention on the part of the importer that the imported goods will ultimately be destined, whether for business or non-business use, in the Philippines at the time of the shipment. cHCaIE Accordingly, notwithstanding the fact that the seafreight shipment of 500 catalogues from Singapore will be distributed to all convention delegates free of charge and has no commercial value, the same shall be subject to the ten percent (10%) value added tax imposed under Section 107(A) of the Tax Code of 1997. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group