VAT Ruling No. 061-90

1990 VAT RULING NO. 061-90 103 (u)-000-00-061-90 Canadian Embassy 9th Floor, Allied Bank Ctr. 6754 Ayala Avenue, Makati Metro Manila Attention: Mr . Georges Leclero Counsellor (Development) Gentlemen : This refers to your letter dated February 20, 1990 requesting exemption from the value-added tax (VAT) of the shipment of 600 bags/15,000 kg. of fortified Canadian First Grade Spray Skimmed milk from the Canadian International Development Academy (CIDA) to the Cross Foundation Agency for the Rehabilitation of the Disabled (CFARD). You contended that CIDA's programme of milk distribution falls under the terms and conditions of the General Bilateral Agreement between the Government of Canada and the Government of the Republic of the Philippines which renders it unconditionally exempt from all duties and taxes; and that CIDA milk programme is premised on an unconditional duty and tax exemption for said goods and unless received as such, the Philippines will be disqualified from the Milk Programme. In reply, please be informed that pursuant to Section 103(u) of the Tax Code, as amended by Executive Order No. 273 and implemented by Section 9(b)(16) of Revenue Regulations No. 5-87, transactions which are exempt under international agreements to which the Philippines is a signatory, are exempt from the value-added tax. The General Agreement on Development Cooperation between the Governments of Canada and the Philippines partakes the nature of an international agreement. Such being the case, the aforesaid goods which are intended as donation from Canadian Government and consigned to the CFARD for distribution to the malnourished children of the Philippines are exempt from the 10% value-added tax. This serves as a certification authorizing the CFARD of the Philippines to secure the release from customs custody the aforesaid 600 bags/15,000 kgs. of fortified Canadian First Grade Spray Skimmed Milk without payment of the 10% value-added tax. cdtech This finds support in BIR Ruling 094-88 (dated March 16, 1988). Very truly yours, JOSE U. ONG Commissioner of Internal Revenue