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LETTER OF INSTRUCTIONS
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LETTER OF INSTRUCTIONS NO. 128
TO
: 1. The Secretary of Finance
2. The Director-General
National Economic and
Development Authority
In order to secure uniformity in the tax treatment of consultants contracted by the Philippine Government, its agencies, entities and instrumentalities in connection with projects financed with foreign loans, the following guidelines, in addition to those already observed in the review and approval of projects proposed for foreign financing, shall be further observed:
1.
Approval of projects proposed by government
agencies shall prescribe the condition that in negotiating tax
provisions in consultancy contracts entered into by such agencies in
implementation of the foreign loan and involving utilization of loan
proceeds, the agency concerned shall agree to provisions exempting
consultants from taxes and duties unless otherwise indicated by the
consultants.
2. With
respect to projects proposed by "proprietary"
government corporations, as well as those involving the private sector
availing of government feasibility loans, approval of such projects
shall be under the condition that the consultancy contracts to be
entered into by such "proprietary" government corporations, including
private sector contracts, in implementation of the foreign loan and
involving utilization of loan proceeds, shall provide for the
imposition of taxes and duties on the consultant irrespective of
whether the taxes and duties are to be paid by the consultant or by the
other party on a reimbursement basis.
You are hereby enjoined to act accordingly.
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