BIR Ruling [DA-002-99]

January 6, 1999 BIR RULING [DA-002-99] Embassy of Republic of Italy Perla Mansion, 117 C. Palanca St. Makati City Gentlemen : This refers to your request dated September 30, 1998 which was referred to this Office by the Department of Finance for exemption from the payment of value-added tax (VAT) and ad valorem tax for the purchase by the Embassy of one (1) unit of motor vehicle, more particularly described as follows: LexLib Make and Model : KIA Sportage Model Year : 1995 Color : Brave blue/grey Chassis Number : KNEJA5535T43 Motor/Engine Number : FE729338 In reply thereto, please be informed that under the principle of reciprocity, this Office may grant tax exemption to the Embassy of a Foreign State and its personnel on their local purchases of goods and services provided that they can submit to the Commissioner of Internal Revenue or his duly authorized representative a copy of the special legislation or international agreement showing that said foreign government allows similar tax exemption to the Philippine Embassy or its personnel on their purchase of goods or services in that foreign country. (BIR Ruling No. 206-93 dated May 11, 1993). Thus, upon the certification by the Department of Foreign Affairs that indirect tax (i.e., value-added tax and ad valorem tax) exemption is granted to the Philippine Embassy and its personnel in a particular host country, the same will also be accorded to the latter's Embassy and its personnel in the Philippines. Such being the case, since the Department of Foreign Affairs has recommended a favorable action on the basis of reciprocity to the request for exemption from the payment of the VAT and Ad Valorem Tax on the local purchase of one (1) unit 1995 KIA Sportage for the official use of Mr. Tullio Testa, Technical Administrative Staff, member of that Embassy, the purchase of said vehicle shall be exempt from VAT and ad valorem tax imposed under Section 106(A) and 149 of the Tax Code of 1997 respectively. (BIR Ruling No. DA-483-96 dated December 17, 1996). Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group