VAT Ruling No. 060-99

May 17, 1999 VAT RULING NO. 060-99 Sec. 109 (g) 000-00 060-99 The Law Firm of Ingles Laurel Salinas 7th Floor, Suite B, Valero Tower 122 Valero St., Salcedo Village Makati City Attention: Mr . Enrico M . Ingles Gentlemen : This refers to your letter dated November 27, 1998 requesting for a ruling that the importation of your client, CLA AIR TRANSPORT, INC (CLA) , of spare parts be exempt from value-added tax (VAT). It is represented that CLA is a domestic corporation engaged in business as an international air cargo carrier, that CLA currently leases a freighter aircraft on a "wet lease" arrangement from MK Corporation of England; that through the services of MK, CLA imported spare parts for emergency use of its leased freighter aircraft, a DC-8-63 plane; and that CLA will use said spare parts only for its leased international freighter aircraft and will not lend, sell or allow its disposition to the local market. You now wish to know whether CLA is liable to pay VAT on the imported spare parts pursuant to the provisions of Section 109(g) of the National Internal Revenue Code. In reply, please be informed that your importation of spare parts for emergency use on your leased freighter is subject to VAT. Section 109(g) of the National Internal Revenue Code provides: "Importation of passenger and/or cargo vessels of more than five thousand tons (5,000), whether coastwise or ocean-going, including engine and spare parts of said vessel to be used by the importer himself as operator thereof;" It is clear from the herein provision, that what is covered by the exemption are ships or sea vessels because of the specific descriptions made by the-law, of more than five thousand tons and whether coastwise or ocean-going , leaving no doubt nor room for further interpretation. Accordingly, your request for VAT exemption on your importation is hereby denied for lack of legal basis. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. cdll Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue