BIR Ruling

May 6, 1968 Miss Teresita M. Tablan Manager, BIA Incorporated 12th Floor, TMBC Bldg., Ayala Avenue Makati, Rizal M a d a m : This refers to your letter dated April 29, 1968 requesting information as to whether or not a car which is imported from Germany by a Charge d' Affaires of one of the countries maintaining an embassy in the Philippines is required to post a re-export bond to guarantee payment of taxes in case he is unable to export the car to his home country within a year's time. In reply, I have the honor to inform you that only duly accredited diplomatic officials of the First Class are exempted from the Payment of compensating taxes on imported cars for their official use. Such being the case, the car imported by the aforesaid Charge d' Affairs is subject to the compensating tax prescribed in Section 190 in relation to Section 184(a) of the Tax Code. The fact that the car shall be re-exported within a year's time does not militate against the taxability thereof because said car shall have been actually used in the Philippines. The compensating tax is a tax on the privilege of using imported articles, not a tax on the articles. (See International Business Machines Corp. vs. Collector, 98 Phil. 598 and the Shell Refining Co. vs. Commissioner of Internal Revenue, CTA Case No. 1394, Oct. 12, 1966). cdta Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue