Bill seeks to exempt foreign aid from VAT

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Saturday, April 12, 2014

A BILL has been filed in the House of Representatives, which seeks to exempt from value-added tax (VAT) all donated imported goods for medical and education, humanitarian relief and similar purposes.

Cagayan de Oro City Representative Rufus Rodriguez said that House Bill 4054 will exempt donated goods from VAT and the entry and distribution of donations for the benefit of the less fortunate will be facilitated.

"It is thus proposed that donated items or goods from foreign donors which are for the non-profit, charitable, medical, educational, humanitarian, relief purposes for the benefit of the poor and needy should be VAT-exempt," said Rodriguez.


He cited that Section 107 of the National International Revenue Code provides that there shall be levied, assessed and collected on every importation of goods a VAT equivalent to 10 percent based on the total value used by the Bureau of Customs in determining tariff and customs duties plus customs duties, excise taxes, if any, other charges, such tax to be paid by the importer prior to the release of such goods from customs custody.

Rodriguez said the NIRC further provides that where the customs duties are determined on the basis of the quantity or volume of the goods and the VAT shall be based on the landed cost plus excise taxes.

"Donated items or goods from donors abroad which are for non-profit, charitable, medical, educational, humanitarian and relief purposes shall be exempt from VAT under this provision," the bill stated.

The bill also stated those subject to exemption of import duties under the Tariff and Customs Code shall likewise be exempt from the VAT payment

“Those donations or food, medicine and equipment for use in the government relief and rehabilitation programs for calamity affected areas as mandated in Presidential Memorandum Order No. 36 Series of 1992, which have been approved for exemption from import duties, shall likewise be VAT-exempt," the bill stated. (Sunnex)

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