BIR Ruling [DA-128-98]

March 26, 1998 BIR RULING [DA-128-98] Embassy of the Republic of Italy Manila Gentlemen : This refers to Note No. 02199 dated December 23, 1997 requesting for exemption from the payment of value-added tax (VAT) for the purchase by the Embassy of four (4) units of motor vehicle, more particularly described as follows Make and Model : ISUZU HI-LANDER APV-SL Model Year : 1997 Color : Cream White Chassis Numbers : 1. PABTBR542V2004952 2. PABTBR542V2004946 3. PABTBR542V2004766 4. PABTBR542V2004771 Engine Numbers : 1. X10666 2. X10662 3. X10498 4. X10471 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 their personnel on their local purchases of goods and services; provided that they can submit to the Commissioner of Internal Revenue or her 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 purchases of goods or services in that foreign country. [BIR Ruling No. 206-73 dated May 11, 1993] Thus, upon the certification by the Department of Foreign Affairs that indirect tax (e.g., value-added tax) exemption is granted to the Philippine Embassy and its personnel in a particular host country, the same privilege 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 on the local purchase by the Embassy of four (4) units 1997 Isuzu Hi-Lander APV-SL for the official use of the Embassy, which is within the framework of the Memorandum of Understanding between the Government of the Republic of the Philippines and the Republic of Italy for the project "Institutional Support to the Health Care Program in the National Capital Region" signed in Manila on January 12, 1989, the sale of the said vehicles to the Embassy of the Republic of Italy shall be exempt from VAT imposed under Section 106 (A) of the Tax Code of 1997. (BIR Ruling No. DA-483-96 dated December 17, 1996) Very truly yours, (SGD.)SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)