VAT Ruling No. 039-99

April 6, 1999 VAT RULING NO. 039-99 Section 106; R.R. 14-97 077-88 006-93 039-99 Citimotors, Inc . LAS PIAS Alabang-Zapote Road Pamplona, Las Pias Attention: Mr . John M . Joseph Sales Manager Gentlemen : This refers to your letter dated March 15, 1999 requesting, in effect, for the exemption from Ad Valorem Tax as well as the VAT zero-rating of your proposed sale of automobiles to International Rice Research Institute (IRRI) comprising of thirty-five (35) units Mitsubishi L200 D/C and six (6) units Mitsubishi L200 Strada. In reply, please be informed that IRRI has been granted tax exemption privileges under both Republic Act 2707 and Presidential Decree No. 1620 and the status of an international organization under said P.D. 1620. (BIR Ruling No. 077-88). Hence, sales of goods to IRRI, such as the automobiles above-described, shall be effectively zero-rated pursuant to Section 106(A)(c) of the Tax Code of 1997. LexLib Under the statutes cited above, the Institute enjoys comprehensive tax exemption privilege which "extends to goods imported and owned by the International Rice Research Institute . . .". This exemption was granted in the light of the commitment of the Philippine Government to extend full support to IRRI. In the context of this commitment, the broad tax exemption privileges granted under Republic Act 2707 and Presidential Decree 1620 shall not be construed as being limited only to the taxes for which the IRRI is directly liable. (Vat Ruling No. 006-93). Furthermore, Revenue Regulations 14-97 entitled "Governing the Imposition of Excise Tax on Automobiles and Other Motor Vehicles" provide that deliveries to tax-exempt entities are exempt from the payment of Ad Valorem tax, thus "Manufacturers or assemblers of automobiles are hereby allowed to sell to tax-exempt persons or entities without the pre-payment of ad valorem tax subject to certain conditions. "1. Tax exempt persons or entities xxx xxx xxx (b) Tax-exempt organizations such as the Asian Development Bank pursuant to special laws and subject to existing rules and regulations." (Section 5, RR 14-97) With the favorable endorsement of the Department of Foreign Affairs for the tax-exempt purchase of automobiles by IRRI, this Office likewise grants your request for exemption from the payment of ad-valorem tax your deliveries to IRRI of (35) units Mitsubishi L200 D/C and six (6) units Mitsubishi L200 Strada. This ruling is based on the facts as represented. If upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group