VAT Ruling No. 042-90

February 15, 1990 VAT RULING NO. 042-90 Mr. Franklin M. Ebdalin Office of the Legal Adviser Department of Foreign Affairs PICC Complex, Manila S i r : This has reference to your query dated May 24, 1989 inquiring "on whether or not services, machinery, equipment and materials, subject of a proposed Memorandum of Understanding (MOU) for the implementation of a project covered by a General Agreement on Development and Cooperation which has not yet been signed, can be zero-rated or exempted". In reply, please be informed that zero-rating or tax exemption under Sections 100 (a) (2); 102 (a) (3) and 103 (u) of the Tax Code can be granted only in an international agreement duly ratified by Congress (See Art. VII Sec. 21, and Art. VI Section 28(4) of the 1987 Constitution). Thus, an unsigned Memorandum of Understanding cannot be a source of the privilege of zero-rating or tax exemption. cdtech Very truly yours, JOSE U. ONG Commissioner of Internal Revenue