BIR Ruling No. 471-2021

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE , BUREAU OFINTERNAL REVENUE Quezon City 57(B); 107(A);RR 2- Person to Contact: IChief,Law Division 98;RMC 8-2017 Tel. Nos.926-55-3^/927-09-63 QT"- 4 i 1 -1 Date DEC 2 i MARUBENI-DMCI CONSORTIUM 8'*^ Floor, LV Locsin Building, Ayala Center Mhkati Avenue,Makati City Attention: Mr.Tomovuki Kakiuchi Project Director(Contractor's Representative) Gentlemen: Thisrefers to your letter dated December 13,2019requesting,on behalfofMarubeni- DMCI Consortium,for confirmation of your opinion,as follows: 1. The unincorporated consortium, Marubeni-DMCI Coiisortium (hereinafter "UC"), having been formed solely for the purpose of bidding anq implementing the LRT Line 2-East(Masinag)Extension Project underthe ContractforProcurementofTrackwork, Electrical and Mechanical(E&M)Systems and Integration with Existing Systems for LRT Line 2-East(Masinag)Extension Project with the Department ofTransportation (DOTr),is not subject to the corporate income tax pursijant to the Exchange ofNotes between the Government of Japan and the Government of the Republic of the Philippines; I 2. Since the UC is not subject to the corporate income tax. the gross payments made by DOTr to the UC are not subject to the 2% creditable >k'itliholding tax(CWT)under Section 57(B)ofthe Tax Code,as amended,and implemjented by Revenue Regulations No.2-98,as amended by Revenue Regulations No. 11-2018; 3. Being not subject to the corporate income tax, the UC is not required to file quarterly and annualincome tax retums with the Bureau ofIntempl Revenue(BIR); 4. With respect to the onshore portion ofthe JICA-funded Project,pursuantto the holding ofthe Supreme Court in Mitsubishi Corporation-Manila Branch v^. Commissioner of Internal Revenue (G.R. No. 175772 dated June 5, 2017) and Revenue Memorandum Circular(KMC)No. 8-2017: a. The VAT-registered suppliers and sub-contractors ofthe UC shall bill and pass on the twelve percent(12%)VAT to the UC. In turn,the UC shall include in its billing and pass on the twelve percent(12%)yAT to the DOTr. Since under the Exchange ofNotes,the DOTr shall assume the payment oftaxes,then the VAT is for the account ofDOTr; I b. The Japanese contractors,shall file the prescribed VATretums on grossreceipts derived from the JICA-funded Project, claim its input taxes from its purchases of goods, properties, and ser vices and shall pa^ the output tax thereon, after offsetting the creditable or allowable input tax^s, considering that the amount