Amendments to Rules 41, 45, 58 and 65 of the Rules of Court

June 29, 2004 ITAD RULING NO. 064-04 Sec 106, 108 & 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-34-99 Embassy of the United States of America Roxas Boulevard Manila Gentlemen : This has reference to your Note No. 0527 dated May 26, 2004 referred to this Office by the Department of Foreign Affairs (DFA), requesting for a tax-free local purchase of two (2) motor vehicles, for the official use of an affiliated agency of the United States of America's Embassy, Naval Criminal Investigative Service (NCIS), specifically described hereunder: Make: Two (2) units of Ford Escape AT 3.0L Model Year: 2004 Color: Panther Black & Harvest Gold VIN Numbers: PE2ET73141GE00351 & PE2ET73141GE00347 Engine Numbers: AJ011324 & AJ011331 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which reads: "ARTICLE 34 "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: "(a) indirect taxes of a kind which are normally incorporated in the price of goods or services; "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of the United States of America or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to Philippine Embassy personnel on their purchases of goods and services in your country. Hence, the local purchase of two (2) units of Ford Escape AT 3.0L for the official use of the Naval Criminal Investigative Service, an affiliate agency of the Embassy of the United States of America is exempt from VAT and ad valorem taxes. ( BIR Ruling No. ITAD-34-99 dated October 18, 1999 ) TcHCDE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service