Section 18Sec./Art. 18

Exemption from Taxes and Duties. - the Authority shall be exempt from the payment of customs duties and taxes on the importation of dairy animals, veterinary and other supplies, other farm inputs, dairy equipment and machineries, including its spare parts, for distribution to dairy cooperatives subject to the following conditions:

1. That said equipment and machineries, including its spare parts are not manufactured domestically in sufficient quantity, of comparable quality and reasonable prices;

2. That it shall be actually, directly and exclusively used by the dairy, cooperatives in the manufacture of its products;

3. That it shall not be disposed within three (3) years from acquisition, without prior approval of the Authority; and

4. If it will be subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the customs duties and internal revenue taxes due on such importations. the customs duties and internal revenue taxes due on such articles shall constitute a lien on the articles itself, superior to all other charges or liens, irrespective of the possessors thereof.

Any donation, contribution, bequest, subsidy or financial aid which may be made to the Authority shall constitute as allowable deduction from the income of the donor for income tax purposes and shall be exempt from donor's tax, subject to such conditions as provided under the National Internal Revenue Code, as amended.

Small farmers and small farmers' dairy cooperatives shall be exempt from all taxes on proceeds from sale of raw milk and milk products.

Milk processors shall enjoy a presumptive input tax credit of four percent (4%) of the value of their gross purchases from small farmers and small farmers' dairy cooperatives.