March 28, 2000

BIR RULING NO. 021-00

105
000-00 021-200

Department of National Defense

Camp General Emilio Aguinaldo
Quezon City

Attention: Hon. Esteban B. Conejos, Jr.

Undersecretary
and
Chairman, DECC

Gentlemen :

This refers to your letter dated January 20, 2000 relative to the holding in
Metro Manila from September 28-30, 2000, as approved by the President of the
Republic of the Philippines, of Defense Asia 2000: 9th International Defense
Equipment Exhibition and Conference; that in view of the nature of this event and to
ensure its success, foreign exhibition will have to bring in their defense
equipment/systems and other materials for viewing and display; and that after the
exhibition is over, the same defense items/articles will be shipped out of the
Philippines, except brochures and other inexpensive product-introduction materials
which are normally distributed free-of-charge, in consonance with industry practices.
Cdpr

Based on the foregoing, you now in effect request for a ruling on the tax
consequence of the bringing in of the foreign exhibitors defense equipment/systems
and other materials for viewing and display.

In reply, please be informed that Section 105 of the Tax Code of 1997,
provides, viz.:

"SEC. 105. Persons Liable. Any person who, in the course of trade
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 or business, sells, barters, exchanges, leases goods or properties, renders
services, and any person who imports goods shall be subject to the value-added
tax (VAT) imposed in Section 106 to 108 of this Code. (Emphasis supplied)

xxx xxx xxx

Based on the foregoing, importation of goods is subject to 10% VAT based on

the total value used by the Bureau of Customs in determining tariff and customs
duties, plus customs duties, excise tax, if any, and other charges, such tax to be paid
by the importer prior to the release of such goods from customs custody pursuant to
Section 107 (A) of the Tax Code of 1997. Since as represented, the imported defense
equipment/systems and other materials are for viewing and display only and the same
shall be shipped out of the Philippines after the exhibition is over, the said importation
is exempt from VAT. Importation connotes permanency and for gain, either for
personal use or for business. In the instant case, the importation is in consonance with
the exhibition which is for a limited period of time only. However, the exhibitors are
required to put up a bond equivalent to the value of the imported defense
equipment/systems and other materials which shall answer for VAT and excise tax if
any, in the event the participants fail to ship back the aforementioned defense/systems
and other materials after the exhibition. Cdpr

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

Very truly yours,

(SGD.) DAKILA B. FONACIER

Commissioner of Internal Revenue

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