BIR Ruling [DA-306-98]

July 3, 1998 BIR RULING [DA-306-98] Embassy of the Federal Republic of Brazil Manila Gentlemen : This refers to Note No. 003 dated January 12, 1998 requesting for exemption from the payment of value-added tax (VAT) for the purchase by the Embassy of one (1) unit of motor vehicle, more particularly described as follows: prcd Make and Model : 2.5 Omega CD Notchback, AT Model Year : 1997 Color : Nova Block Chassis Number : WOL00026V1966167 Motor/Engine Number : X25XE08217881 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 one (1) unit 1997 2.5 Opel Omega CD Notchback, AT for the official use of the Embassy, the sale of said vehicle 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) cdpr Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)