VAT Ruling No. 112-89

April 21, 1989 VAT RULING NO. 112-89 Department of Social Services and Development Batasan Complex, Q.C. Attention: Hon. Mita Pardo De Tavera, M.D. Secretary S i r s : This refers to your letter dated Nov. 17, 1987, inquiring whether or not services rendered by a local contractor for the delivery of foreign-donated relief commodities to targetted recipients nationwide as provided for by Diplomatic Notice 3001, by the Department of Social Services and Development (DSSD) is exempt from the payment of the 10% value-added tax (VAT). In reply, please be informed that under the provisions of Diplomatic Notice 3001, the Philippine government shall accord duty-free entry into the Philippines as well as exemption from internal taxation of supplies or goods approved by the United States government. Thus, such importation by the DSSD is exempt from the VAT under special laws or international agreement to which the Philippines is a signatory pursuant to Sec. 103 (a) of the Tax Code, as amended by E.O. No. 273. However, local contractors who are liable for the payment of the 10% VAT on the delivery of foreign donated relief commodities can shift the said tax to the DSSD. In turn, the DSSD being the end-user has to shoulder the payment of the VAT as part of its expenditures. cSIADH Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue