VAT Ruling No. 024-90

February 12, 1990 VAT RULING NO. 024-90 101/102-000-00-024-90 Maritime Industry Authority PPL Building United Nations Avenue Metro Manila S i r : This refers to your letter dated December 7, 1988 requesting a ruling regarding the applicability of the value-added tax on the purchase of vessels by Far East Bank and Trust Company by using the funds of investors. As represented the said vessels shall be leased out or chartered by FEBTC to companies for interisland shipping operations. In reply, please be informed that when FEBTC purchases the vessels from local suppliers, the sale is subject to 10% VAT pursuant to Section 100 of the Tax Code, as amended. However, in case the passenger and/or cargo vessels are imported, the importation is exempt from VAT, if the vessels are more than 10,000 tons and that they are used by the importer himself in his transportation business or as operator thereof. Since FEBTC is not a transportation-operator, but will lease or charter the said vessels, its importation as well as its leasing activity shall be subject to VAT pursuant to Sections 101 and 102 of the Tax Code, as amended. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue