BIR Ruling [DA-537-99]

September 17, 1999 BIR RULING [DA-537-99] International Labour Organization 5/F NEDA Bldg., 106 Amorsolo Street Legaspi Village, Makati City Attention: Mr . Richard Szal Director Gentlemen : This refers to your letter dated August 4, 1999 requesting in effect, for exemption from the payment of the value-added tax (VAT) and ad valorem tax for the purchase by Mr. Frederick Thomasson during his tour of duty in the Philippines as an ILO/SEAPAT Senior Specialist in Workers' Activities of one (1) unit motor vehicle, more particularly described as follows: LibLex Make and Model : Honda CRV A/T Model Year : 1999 Chassis Number : PADRD 1830XV004098 Motor/Engine Number : PEWD7-P204094 Color : Ruby Red In reply, 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 (i.e., value-added tax and ad valorem 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 and ad valorem tax on the local purchase by the Embassy of one (1) unit Honda CRV A/T for its official use, the sale of said vehicle shall be exempt from VAT and ad valorem tax imposed under Sections 106(A) and 149 of the Tax Code of 1997, respectively. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group