BIR Ruling [DA-439-98]

September 29, 1998 BIR RULING [DA-439-98] Australian Embassy P.O. Box 1071 Makati City, Metro Manila Gentlemen : This refers to your letter request 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: aisadc Make and Model : Honda Accord 2.2 li Vti VTEC 4 Speed Automatic Transmission Model Year : 1997 Chassis Number : PHSV64D1379 Motor/Engine Number : PH225000625 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 its 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 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 Honda Accord for its official use, 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) LLjur Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)