BIR Ruling No. 283-2022

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

BIR Ruling No. VAT-137-21 Section 109 (1) (T) of the Tax Code of 1997, as amended

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MAMSAR CONSTRUCTION AND INDUSTRIAL CORPORATION Macapagal Avenue, Tubod Iligan City, 9200

Attention: Almita D. Barug Vice President -- Projects-

Gentlemen:

This refers to your request.for an exemption froin value-added tax (VAT) on the importation of one (1) unit Tug Boat, "M/V Sadong 33 from the registered owner, Pioneer Mariner SDN BHD of Malaysia.

Documents submitted disclose that MAMSAR Construction and Industrial Corporation ("MAMSAR"), with Taxpayer Identification Number (TIN) is a domestic corporation organized under the laws of the Republic of the Philippines; that it is registered

businesses including the construction, enlarging, repairing, removing, developing, or otherwise engaging in any work upon buildings, roads, highways, manufacturing plants, bridges, with the Securities and Exchange.Commission (SEC) under Company Registration No. airfields, piers, docks, mines, shaft:s, waterworks, railroads, railway structures, ali iron steel! that its primary purpose is "[t]o engage in general construction and other allied

wood, masonry and earth constructron, and to make, execute, bid for and take or receive any contracts or assignment of contracts therefore, or in reiation thereto, or connected therewith and to manufacture and furnish building materials and supplies connected therewith: and doing of any and all other business and contracting incidental thereto or connected therewith, and the

incidental to the furtherance and /or inplementation of the purpose therein mentioned."; that it doing and performing of any and ali acts and things necessary, proper or convenient for and is duly accredited by the Maritime Industry Authority (MARINA) and is authorized to engage in domestic shipping business per MARINA Certification No. dated January 28, 2022 which is valid unti! January 27, 2025; and that it is currently importing one (1) unit vessel named "M/V Sadong 33" from Pioneer IMariner SDN BHD of Malaysia. particularly described as follows:

Breadth Registered Port of registry Vessel Type Flag Length Registered Specification Vessei Name Vessel 20.11 Meteris 5.50 Meters Malaysia Kota Kinabalu Steel Tug Boat "M/V Sadoig 33"

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Depth Registered Gross Tonnage Net Tonnage Main Engine 2.74 Meters 2 x Cummins KTA19-M3 60 33

Previous Owner Place of Building/Shipyard Year Built Hull material Classification Pioneer Mai iner SDN BHD KW 2008 Sibu, Sarawak Malaysia Steel

In reply, please be informed that Section 109 (1) (T) of the National Internal revenue Code (Tax Code) of 1997, as amended, provides as follows:

"SEC. 109. Exempt Transactions.

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

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(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; "

In relation thereto, Section 4.109-1 (B) (1) (t) of Revenue Regulations (RR) No. 16-2005, as amended, states that:

"SECTION 4.109-1. VAT-Exempt Transactions.

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(B) Exempt Transactions.

(1) Subject to the provisions of Subsection (1) hereof, the following transactions shall be exempt from VAT:

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(t) Sale, importation -or lease of passenger or cargo vessels and aircraft, including ergine, equipment and spare parts thereof for domestic or international transport operatioms; Provided, however. that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shidl be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MaritineIndustry Authority (MARINA):

Based on the above-cited provisions, the importation of passenger or cargo vessel destined for domestic transport operations shall be exempt fom VAT. Hence, the importation by MAMSAR of one (l) unit vessel named "M/V Sadong 33" shall be exempt from VAT

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pursuant to Section 109 (1) (T) of the Tax Code of 1997,: as amended. However, the VAT exemption shall be subject to the 'requirements on restrietion on vessel importation and mandatory vessel retirement program of MARINA.

This ruling is being issued on the basis of the foregoing facts as represented. However. if upon investigation, it will be disciosed that the facts are different, then this ruling shall be considered null and void.

Very truly yours siucM V

Commissioner of Internal Revenue CAESAR R. DULAY 051739 K-

Subject to presentation of the Authority to Import issued by the MARINA