BIR Ruling No. 97-2020

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City 2004

Sec.109(1)(T),1997 NIRC BIR Ruling No.092-2016 VAT-003-2020

JAN 1 7 2OZ0

CAGLI Shipping Lines Gothong Private Wharf, Pier 7 F.F. Cruz Reclamation Area Mandaue City

Attention : Mr. Calvin Boniface Gothong President

Gentlemen:

This refers to your letter dated December 20, 2016 requesting for a certificate of tax

Ship named MV Prince Hayate (to be renamed MV Panglao Bay 1) pursuant to Sec. 109(1)(T) of the Tax Code of 1997, as amended. exemption on the vessel importation of one (1) unit 5,930.00 GT, 1995 built RoRo Cargo/Vehicle

Documents submitted show that the importer, Carlos A. Gothong Lines, Inc. (CAGLI) is a domestic corporation organized and registered with the Securities and Exchange Commission (SEC) under Company Registration No. . It is registered with the Bureau of Internal Revenue (BIR) under Tax Identification No. with office address at Gothong Bldg., Port Service Rd., North Reclamation Area, Brgy. Tejero, Cebu City. It is duly registered with the Maritime Industry Authority (MARINA) per Certificate of Accreditation No. CEB valid until October 30, 2019, to engage in domestic shipping business. CAGLI's vessel to be imported is primarily intended to provide transport services throughout the country which purpose is covered by MARINA's authority to acquire subject vessel thru importation dated December 9.

2016.

Below is the specification of the subject vessel:

Vessel Name Year Built. MV Panglao Bay 1 1995

Hull Gross Tonnage Type of Engine Previous Name Net Type Make of Engine RORO Cargo vehicle Hitachi,Osaka B&W/7S50MC Diesel MV Princess Hayate Steel 5930 1850 No. of Engines - 1 Breadth -- 22.40 m Speed - 19.00 Knots Depth 11.75

VAT-003--2020

JAN 1 7 2020

Total Power Port of Registry Ulaanbaatar 9988

Date of expiry 0! May 2017

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

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

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

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

intended to provide transport operations throughout the Philippines shall be exempt from VAT. Based on the above-cited provision, the importation, among others, of a marine vessel

In relation thereto, Section 4.109-1 (B)(1)(t) of 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 XXX

(B) Exempt transactions. -

(1)Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT:

XXX XXX XXX

(t) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for

the exemption from VAT on the importation and local purchase of program of MARINA. restriction on vessel importation and mandatory vessel retirement domestic or international transport operations; Provided, however, that passenger and/or cargo vessels shall be subject to the requirements on

It is noted that MV Panglao Bay 1 has been issued by MARINA with the required authority to be imported. Hence, the importation of the said vessel by CAGLI is deemed compliant with the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA

Accordingly, the importation of MV Panglao Bay 1 shall be exempt from VAT pursuant to Section 109(1)(T) of the Tax Code of 1997, as amended. The VAT exemption, however, shall

1 Renumbered by Republic Act No. 10378

VAT-003-2020 JAN 1 7 2020

be subject to the strict compliance of the conditions contained in the letter of approval issued by MARINA for the importation of the above-described vessel dated December 9, 2016.

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

Very truly yours,

K-1-RFR \panglao1 Commissioner of Internal Revenue CAESAR R. DULAY 031800