BIR Ruling No. 281-2016

He BUREAU OF INTERNALREVENUE REPUBLICOFTHE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Sec.1091T.1997 NIRC RA 9295 RA 9337 BIR Ruling No. 385-2014

A281-2016 627-2016

Ermita. Manila Molave Tanker Corporation 3/F VIP BIdg.1140 Roxas BIvd.cor.Nuestra.Sr.de Guia

Gentlemen:

on the vessel importation of one (1) unit brand new Steel Petroleum Product Tanker named: MK NEPTUNE", TBR: MTC APITONG" from China pursuant to Sec. 4.109-1 B(1)(t) of the Tax Code of 1997, as amended. This refers to your letter dated April 26. 2016 requesting for a certificate of tax exemption

mandatory vessel retirement. Pursuant to RA 9295. Rule II. Section 3. the conditions for the acquire subject vessel thru importation dated March 4. 2016 pursuant to the MARINA its regulations under Republic Act (RA) No. 9295 and that it also conforms with the rules on availment of value-added tax (VAT) exemption are as follows: transport/hauling service for Petron in its distribution of petroleum products throughout the country and to other prospective clients which purpose is covered by MARINA's authority to endorsement dated April, 18. 2016, favorably endorsing the vessel importation as compliant with inland water transport business. MTC's vessel to be imported is intended primarily to provide (2016) and valid until January 28, 2019. MTC is authorized to engage in domestic shipping and Maritime Industry Authority(MARINA per Certificate of Accreditation No. domestic corporation organized and registered with the Securities and Exchange Commission Revenue (BIR) under Tax Identification No. (SEC) under Company Registration No. Documents submitted show that the importer, Molave Tanker Corporation (MTC) is a It is registered with the Bureau of Internal It is duly registered with the

3.3 Said articles are reasonably needed and will be used exclusively by the 3.1 Said articles are not manufactured domestically in sufficient quantity of 3.2 Said articles are directly imported by a MARINA-registered domestic ship- comparable quality and at reasonable prices, to be determined by the MARINA: owner/operator: registered domestic ship-owner/operator in its transport operations:

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herein below stated is the specification of the subject vessel:

Vessel Name Ship Builder Date Keel Laid Year Built FUJIAN MAWEI SHIP BUILDING LTD ExMK NEPTUNETBRMTCAPITONG 2013 2016 IMO No. : Official No. Class of Vessel * ABS

Construction of Vessel -- I Double Steel Hull No. : MW-506-4

Call Sign Flag : Singapore 9V7507 Length Net Tonnage Breadth Depth Gross Tonnage : 91.20 m 7.30 m 2.993.00 Tons 1,159.00 Tons 15.20 m

Dead Weight Engine Two (2) DAIHATSU Diesel 4.S.C.S.A 3.995.00 Tons

In support of its request for exemption, MTC has submitted the following documents:

1 Articles of Incorporation and By-Laws of MTC

2 BIR Certificate of Registration of MTC

3 MARINA Accreditation Certificate No.

4 MARINA Authority to acquire vessel thru importation dated March 4, 2016:

5 MARINA Endorsement for vessel as compliant to vessel importation and

mandatory requirement dated April 18.2016:

6 Secretary Certificate of Thomas A. Tan as the authorized signatory to the

1 Memorandum of Agreement dated February 3. 2016: application:

8 Bill of Sale dated March 4.2016:

9 Builders Certificate (with Notarial Certificate):

Io. Certificate of Singapore Registry: I . Provisional Tonnage Certificate: 12 13. Interim Certification for Vessel Registration dated January 27. 2016: General Arrangement (Plan) of vessel

In reply. please be informed that Section 109(1)(T) of the 1997 Tax Code. as amended

provides as follows:

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

transactions shull be exempt from the value-added tax. (l) Subject to the provisions of Suhsection (2) hereof. the folloving

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

intended to provide transport/hauling services for Petron in its distribution of petroleum products throughout the Philippines shall be exempt from VAT Based on the above-cited provision, the importation. among others. of a cargo vessel

as amended by RR No. 15-2015, which implements the above-quoted provision, provides: In relation thereto, Section 4.109-1 (B)(1)(t) of Revenuc Regulations (RR) No. 16-2005.

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 xxxxxx

(t Sale. inportution or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic orinternational transport operations: Provided. however

passenger und/or cargo vessels shall be subject to the requirements on that the exemption from VAT on the importation and local purchase of

restriction on vessel importation and mandatory vessel retirement program of MARINA.

by MARINA with the required authority to be imported. Hence, the importation of the said vessel It is noted that MK Neptune, TBR: MTC Apitong is a brand new vessel and has been issued

by MTC is deemed compliant with the requirements on restriction on vessel importation and

mandatory vessel retirement program of MARINA.

Accordingly the importation by MTC of MK Neptune, TBR: MTC Apitong shall be

exempt from VAT pursuant to Section 109(1)(T) of the Tax Code of 1997, as amended. The VAT

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letter of approval issued by MARINA for the importation of the above-described vessel. exemption, however, shall be subject to the strict compliance of the conditions contained in the

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

Very truly yours.

Imolave K-1-RFR Commissioner of Internal Revenue KIM S.JACINTO-HENARES 042353 JUN 2 4 2U 15