BIR Ruling No. 316-2018

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMI NT OF FINANCE

Quezon City

RA 10349

DND Buiiding, Camp Gen. Emilio Aguinaido Quezon City DEPARTMENT OF NATIONAL DEFENSE BIR Ruling No. 398-2014 BIR Ruling No. 396-2014 BIR Ruling No. 397-2014 #316-2018 3-5-2018

Attention: Honorio S. Azcueta Officer-In-Charge

Gentlemen:

importation of 2,200 units of 4Qmm Grenade Launcher for the Philippine Army, as specified in the Letter of Acceptance PI-B-VBB, an agreement that was entered into by and between the DND/AFP and United States of America/JUSMAG. The project has certificate of exemption from value-added tax and documentary stamp tax on the an estimated cost of This refers to your letter dated October 22, 2014, requesting for the issuance of

value-added tax and customs duties pursuant to Section 10 of Republic Act (RA) No. Commissioner of Internal Revenue, GR Nos. 164155 and 175543, February 25, 2013. 10349, amending RA No. 7898, as well as from DST pursuant to the decision of the Supreme Court in' the case of Fort Bonifacio Development Corporation vs It is represented that the acquisition of the above equipment is exempt from

7898, provides: In reply, please be informed that Section 10 of RA 10349, amending RA No.

respectively, which shall read as: Act which shall now become the new Sections 17. 18 and 19 "SEC. 10. Insert three (3) sections after Section 16 of the same

projects, undertakings, activities and programs under the Duties.- The sale of weapons, equipment and ammunitions to the AFP, which are directly and exclusively used for its Revised AFP Modernization Act, shall be exempt from the same by the AFP shall likewise be exempt from the value- valued-added tax; Provided, Tha. the importation of the added tax and customs duties. 'SEC. 17. Exemption from Value-Added Tax and Customs

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ammunitions to the Armed Forces of the Philippines (AFP), which are directly and exclusively used for its projects, undertakings, activities and programs under the Under Section 10 of RA 10349, the sale of weapons, equipment and

Revised AFP Modernization Act, shall be exempt from the valued-added tax. Moreover. the importation of the same by the AFP shall likewise be exempt from the value-added tax. In.relation thereto, the Department of National Defense (DND) issued the Department Circular No. 3 (Issuing the Implementing Guidelines, Rules and

April 11, 2013 which, among others, defined the term "equipment" as referring to "all Regulations of the Revised Armed Forces of the Philippines Modernization Act) dated

sub-organizations within the AFP." (BIR Ruling Nos. 396-2014, 397-2014 and 398- non-expendable items needed to outfit or eguip any individual and/or organizations and 2014 dated October 17,2014)

and programs under the Revised AFP Modernization Act. units of 40mm Grenade Launcher which are non-expendable items needed to equip the Philippine Army, is exempt from value-added tax, provided that the aforesaid equipment shall be used directly and exclusively by the AFP for its projects, undertakings, activities Accordingly, the purchase and subsequent importation by DND/AFP of 2,200

Anent the issue on DST, please take note that the sale of personal property is not subject to DST. Under Section 196 of the 1997 Tax Code, only the conveyances, deeds or instruments transferring any land, tenement or other real property shall be subject tc

Internal Revenue, supra, is inappiicable since the issue therein was the imposition of DST. The cited case of Fort Bonifacio Development Corporation vs Commissioner ol

. DST on the sale of a parcel of land, which is not the issue in this case. However, the notarial acknowledgment on the deed of sale is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the 1997 Tax Code. (BIR Ruling Nos. 396-2014, 397- 2014 and 398-2014 dated October 17,2014)

However, 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.

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Commissioner of Internal Revenue CAESAR R. DULAY * 0 1 3 9 67

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