BIR Ruling [DA-325-98]

July 17, 1998 BIR RULING [DA-325-98] Embassy of the Republic of Cuba 2330 Roxas Boulevard Pasay City Gentlemen : This refers to your request for exemption from the payment of ad valorem and value-added taxes (VAT) in the amounts of P57,747.00 and P44,273.00, respectively, which was indorsed to this office by the Director of Immunities and Privileges, Department of Foreign Affairs. It is represented that the Embassy of the Republic of Cuba purchased one (1) locally assembled motor vehicle, more particularly described as follows: MAKE AND MODEL : HONDA CIVIC 1.5 LXI MODEL YEAR : 1996 COLOR : KAIZER SILVER CHASSIS NUMBER : PADEK-3520WV000901 MOTOR/ENGINE NUMBER : P6DD1-P300871 that said motor vehicle is being purchased for the use of its Ambassador, Mr. Francisco V. Ramos Alvarez; and that in a letter dated April 27, 1998 (No. 981558), the Department of Foreign Affairs approved the said request for the tax-free purchase of a motor vehicle, 1996 Honda Civic 1.5 LXI 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 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. 206-73 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 that Embassy of one (1) unit 1996 Honda Civic 1.5 LXI for the personal use of Mr. Francisco V. Ramos Alvarez, the sale to said Mr. Francisco V. Ramos Alvarez of the said vehicle shall be exempt from ad valorem tax and VAT imposed under Sections 149 and 106 (A) of the Tax Code of 1997. (BIR Ruling No. DA-483-96 dated December 17, 1996) cdta Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)