BIR Ruling No. 289-2016

REPUBLICOFTHE PHILIPPINES

DEPARTMENTOF FINANCE

BUREAU OFINTERNALREVENUE

Quezon City

Section 109(1)(T) NIRC RR No. 15 2015 #289-2016 627-2016 Tel Nos. 926-5536/927-09-63 Person to Contact: Chief, Law Division

S-301 Goldhill Tower Condominium STARLITE FERRIES,INC. No. 5 Annapolis St., Greenhills San Juan, Metro Manila

Attention: Francis S. Cusi

President

Gentlemen:

Starlite Ferries, Inc., for a Certificate of Value-Added Tax (VAT) Exemption on its Section 109(1)(T of the National Internal Revenue Code (NIRC of 1997,as amended importation of a brand new Ro-Ro (roll-on, roll-off) type passenger vessel, pursuant to This refers to your letter dated October 14. 2015. requesting on behalf of

it is duly accredited by the Maritime Industry Authority (MARINA) to engage in domestic shipping business per MARINA Certification dated April 4, 2013 valid until RO-RO type passenger vessel which is particularly described as follows: Exchange Commission (SEC) under Company Registration No. April 3. 2016; and that Starlite Ferries, Inc. is currently importing one (1) brand new No Documents submitted show that Starlite Ferries, Inc., with Tax Identification is a domestic corporation registered with the Securities and that

Vessel's Name perpendiculars Breadth (moulded) LengthOverall Length. Depth deck Main Dimensions moulded/Car Promenade9.40m/4.40m between61.80m M/V "Starlite Pioneer Approx.66.80m 15.30m

(International draft/scantling draft "Gross deck) Draft (designed3.20m/3.30m) tonnage 2,600 M.T.

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Deadweight Designed Draft on630M.T

Name of Builder Engine Model Carrying Capacity Vehicle(Truck Base Main Engine Maker Passenger: Kegoya Dock Co. Ltd. Yanmar Diesel Co.Ltd Truck weight-25 tons Yanmar 6EY 22AW Max.Truck capacity-19 cars 727 persons

that MARINA has approved the importation of the above Ro-Ro vesscl in its letter

dated September 30,2015 addressed to Starlite Ferries,Ine; and that per Sworn Statement dated October 15.2015 executed by Francis S.Cusi,President of Starlite Ferries, Inc., the subject vessel cannot be manufactured domestically in a comparable quality, technology and at a reasonable price, and that it is reasonably needed and will be used exclusively by the company in its transport operations.

following documents: In support of its request for exemption, Starlite Ferries, Inc. has submitted the

1. Certified true copies of the SEC Certificate of Registration, Articles of 2 Certified true copy of the MARINA Authority to Import: Incorporation and By-Laws;

3 Certificate of Registration with MARINA 4. Certified true copy of the Shipbuilding Contract; and 5.BIR Certificate of Registration.

In reply, please be informed that Section 109(1)(T) of the NIRC of 1997, as

amended, provides as follows:

"Sec. 109 Exempt Transactions . - Exempt Transactions.-

(1) Subject to the provisions of Subsection (2) hereof. the following transactions shall be exempt from the value-added tax.

(T)' Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations."

Based on the above-cited provision, the importation, among others, of a passenger vessel destined for domestic transport operations shall be exempt from VAT.

In relation thereto, Section 4.109-1 (B)1(t) of the Revenue Regulations RR) No.16

2005, as amended by RR No. 15-2015, which implements the above-quoted provision.

provides:

"SECTION 4.109-1. VAT-Exempt Transactions.

XXX XXX XX

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(B) Exempt transactions.

(1)Subject to the provisions of Subsection (2) hereof. the

following transactions shall be exempt from VAT

xxxxxx xxx

Sale, importation or lease of passenger or cargo vessels and aircrafi, including engine, equipment and spare parts thereof for domestic or international transport

operations; Provided, however. that the exemption from

VAT on the importation and local purchase of passenger

and/or cargo vessels shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA. "

It is noted that M/V "Starlite Pioneer" is a brand new vessel and has been issued by MARINA with the required authority to be imported. Hence, the importation of the said vessel by Starlite Ferries, Inc. is deemed compliant with the requirements

on restriction on vessel importation and mandatory vessel retirement program of MARINA. Accordingly, the importation by Starlite Ferries, Inc. of M/V "Starlite

Pioneer shall be exempt from VAT pursuant to Section 109(1)(T) of the NIRC of

1997, as amended. The VAT exemption, however, shall be subject to the strict compliance of the conditions contained in the letter of approval issued by MARINA

for the importation of the subject vessel.

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.

Very truly yours.

K-I -JHB Commissioner of Internal Revenue KIM S. JACINTO-HENARES 042395 JUN 2 4 2016