Radio Broadcasting Law

September 15, 2006 DA ITAD BIR RULING NO. 107-06 Sec. 109 National Internal Revenue Code 1997; Article III, Section 10 Vienna Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-01-04 Food and Agriculture Organization of the United Nations (FAO/UN) 29th Floor, Yuchengco Tower RCBC Plaza 6819 Ayala Avenue Makati City Gentlemen : This refers to your letter dated June 29, 2006, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting exemption from payment of value-added tax (VAT) and ad valorem tax on the purchase of one (1) locally-purchased motor vehicle, for the official use of the Food and Agriculture Organization of the United Nations (FAO/UN), specifically described as follows: Make: Toyota Innova J. Diesel Model Year: 2006 Color: Quick Silver Engine Number: 2KD-9652709 Chassis Number: KUN40-5010205 In reply, please be informed that Section 109 of the National Internal Revenue Code of 1997 (NIRC), as amended by Section 7 of Republic Act No. 9337 which took effect on November 1, 2005 , provides as follows: "SEC. 109. Exempt Transactions . Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529 ; xxx xxx xxx" (Emphasis supplied) In relation thereto, the November 2, 1977 letter of Ambassador Carlos J. Valdes to Director General Edouard Saouma of the Food and Agriculture Organization, which is part of the Exchange of Letters constituting the Agreement between the Government of the Republic of the Philippines and FAO, provides: "I have the honor to refer to the proposed appointment of an FAO representative to the Philippines and the establishment of his office. In this connection, we would like to present for your concurrence the following revised terms and conditions . . . To the extent that it is not already bound to do so, the Government agrees to apply to the Organization, its staff, funds, property and assets, the provisions of the Convention on the Privileges and Immunities of the Specialized Agencies. The FAO Representative shall be accorded the treatment provided for in Section 21 of the said Convention. The Government also agrees to grant FAO, and to the FAO Representative and his staff, privileges and immunities not less favourable than those granted to a representative of any other specialized agency or similar United Nations body in the Philippines. ICESTA xxx xxx xxx" Accordingly, Section 10, Article III of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated November 21, 1947 provides: "Article III xxx xxx xxx Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax. "xxx xxx xxx" Based on the above provisions, important purchases of goods and services in the Philippines for official use of the specialized agencies of the United Nations (UN) are accorded exemption from indirect taxes such as the ad valorem tax and VAT imposed under Section 107 of the NIRC. In view of the foregoing, this Office is of the opinion and so holds that aforementioned purchase of one (1) unit 2006 Toyota Innova J. Diesel, for the official use of the FAO/UN, is exempt from VAT, pursuant to the Agreement between the Government of the Philippines and the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations. It is hereby understood that this exemption applies only to vehicles purchased under the name of Food and Agriculture Organization of the United Nations for its official use. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. cEAIHa Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service