Increasing the Registration Fees on Large Cattle

July 8, 2009 DA ITAD BIR RULING NO. 071-09 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-67-06 Embassy of Japan 2627 Roxas Boulevard Pasay City Attention: Mr. Kazuyoshi Soneda Second Secretary Gentlemen : This has reference to your Note Verbale No. 247-09 dated May 27, 2009, referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits of the Department of Foreign Affairs (DFA), requesting exemption from payment of value-added tax (VAT) on the purchase from Mr. Toshiyuki Saito, Second Secretary of the Embassy of Japan one (1) locally-purchased motor vehicle (imported by local dealership), by Mr. Kazuyoshi Soneda, Second Secretary of the Embassy of Japan, specifically described as follows: aITECA Type of Use: Personal Make: 2000 Honda CRV Plate No.: DC 2041 Chassis No.: PADRD1830XV104727 Engine No.: PEWD7P204722 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; . . . ." (Emphasis supplied) Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value-added tax (VAT), which is an indirect tax, on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Embassy of Japan and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated February 10, 2009, that the Government of Japan allows similar exemption to the Philippine Embassy and/or its personnel on their local purchases of motor vehicles thereat. HDcaAI Hence, since the transferor and the transferee of the subject motor vehicle are both VAT exempt individuals, the sale of one (1) unit of 2000 Honda CRV by Mr. Toshiyuki Saito, Second Secretary of the Embassy of Japan to Mr. Kazuyoshi Soneda, Second Secretary of the same embassy, for his personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-67-06 dated June 8, 2006) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner