Exempting Certain Personal Property from Attachment and Execution for Delinquency in Payment of Land Tax

January 9, 2006 DA ITAD BIR RULING NO. 002-06 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; ITAD Ruling No. 048-01 Embassy Of The Islamic Republic of Iran 2224 Paraiso St. cor. Pasay Road, Dasmarias Village, Makati City Gentlemen : This has reference to your Note No. 6060 dated October 3, 2005 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of tax on the purchase of one (1) locally-assembled motor vehicle, for the official use of the Embassy of the Islamic Republic of Iran, specifically described as follows: Make: Toyota Innova J 2.0 Gas M/T Model Year: 2005 Color: Quick Silver Engine Number: ITR-6122403 Chassis Number: TGN40-5003594 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations 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" Thus, the tax exemption privilege of an Embassy and/or its diplomatic agents does not include exemption from value-added tax (VAT) on its purchases of locally assembled motor vehicles. In other words, purchases by that Embassy and/or its diplomatic agents of locally-assembled motor vehicles shall be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of the Islamic Republic of Iran and/or its personnel on their purchases of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005, that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchase of locally assembled motor vehicles in your country. Hence, the local purchase of one (1) unit of 2005 Toyota Innova J 2.0 Gas M/T for the official use of the Embassy of the Islamic Republic of Iran is exempt from VAT. (ITAD Ruling No. 048-01 dated May 15, 2001) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service