BIR Ruling [DA-212-98]

June 3, 1998 BIR RULING [DA-212-98] Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: A . Khmelnitsky Ambassador Gentlemen : This refers to your letter dated May 27, 1998 requesting for exemption from the payment of ad valorem and value added taxes (VAT) in the amounts of One Hundred Sixty-Six Thousand Eight Hundred Sixty-Nine Pesos (P166,869.00) and Sixty-Four Thousand Three Hundred Sixty Four Pesos (P64,364.00), respectively. LLjur It is represented that the Russian Federation purchased one (1) locally assembled motor vehicle, more particularly described as follows: "One unit Toyota Corona Exsior 2.0 EX-Saloon Limited Edition 1998 cc 5 Speed manual Transmission with Aircon, AM/FM Radio/Cassette, Aluminum Wheels and with all the power features, and 6 Disc CD Shuttle, ABS Model: ST191L AEMNK Leather Seats, Air Purifier, Rose Wood Panel, LE Badge" that said motor vehicle is being purchased for the use of Mr. Oleg Nazarov, Deputy Trade Commissioner of the Embassy of the Russian Federation; and that in a letter dated May 19, 1998 (No. 981856), the Department of Foreign Affairs approved the said request for the tax-free purchase of a motor vehicle, 1998 Toyota Corona LE on the basis of reciprocity. 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 approved the request for exemption from the payment of the ad valorem tax and VAT on the local purchase by the Embassy of one (1) unit 1998 Toyota Corona LE for the official use of Mr. Oleg Nazarov, the sale to said Mr. Oleg Nazarov of the said vehicle shall be exempt from ad valorem tax and VAT imposed under Section 106 (A) of the Tax Code of 1997 (BIR Ruling No. DA-483-96 dated December 17, 1996) LLphil Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group