World Bank Office Manila

March 7, 2007 BIR RULING [DA-142-07] 187-99 World Bank Office Manila 23rd Floor Taipan Place F. Ortigas Jr. Road, Ortigas Center Pasig City Attention: Ms. Maryse Gautier Acting Head of Office Gentlemen : This refers to your letter dated December 15, 2006, as indorsed by Mr. Fidel G. Condrada, OIC-Revenue Office, Department of Finance, requesting for exemption from the payment of value-added tax (VAT) on one (1) unit locally purchased motor vehicle by Mr. Jehan Arulpragasam, Senior Economist and Country Sector Coordinator for Human Development Program of the World Bank, more particularly described as follows: Make and Model : 2007 Nissan X-Trail, 2.0L AT 2WD Chassis No. : TDAALAAT30-A46445 Engine No. : QR20-655510A Color : Black X In reply, please by informed that under Section VII, Article XIII (h) of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank) concerning the establishment of a Resident Mission in the Republic of the Philippines, it is provided therein that: "VII. OFFICERS, EXPERTS AND CONSULTANTS OF THE BANK "ARTICLE XIII "Officers, experts, persons on secondment and constants of the Bank assigned to perform with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: xxx xxx xxx (h) except with respect to nationals or permanent residents of the Philippines, the right to import and export or sell their furniture and effects, including motor vehicles and spare parts therefor subject to payment of applicable taxes thereon if sold to and enjoying the same privileges and immunities as regards goods, including motor fuel, purchased in the Philippines as are accorded in the Philippines to the resident members of diplomatic and international organizations." In addition, paragraph (j) thereof also grants to the officers, experts, persons on secondment and consultants of the World Bank "all such exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations." From the foregoing, it is clear that the afore-named officer of World Bank is entitled to exemption not only from direct taxes but also from indirect taxes, e.g., VAT and ad valorem tax on his local purchase of goods. The evident intention of the above-stated provisions of the Establishment Agreement is to place the officers of World Bank at par with officers of other international organizations in so far as exemption from indirect taxes is concerned. One such organization, is the Asian Development Bank (ADB) whose officers are granted exemption from VAT and ad valorem tax on their local purchase of motor vehicles pursuant to Department Order No. 43-89 of the Department of Finance. HAEDCT Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with precedent ruling granting VAT and ad valorem tax exemption to World Bank, as well as ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request for exemption from VAT and ad valorem tax imposed under Sections 106(A) and 149 of the 1997 Tax Code, as amended, on Mr. Jehan Arulpragasam's purchase of one (1) unit 2007 Nissan X-Trail motor vehicle for his personal use, is hereby granted. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service