Purchases of Locally-produced Automobiles by the Embassy Subject to VAT and Excise Tax

March 19, 1992 BIR RULING NO. 089-92 100 (a); 126; 149 001-88 089-92 Canadian Embassy 9th Floor, Allied Bank Center 6754 Ayala Avenue, Makati Metro Manila Gentlemen : This refers to your Note No. 390-91 which was referred to this Office by the Director for Privileges and Immunities, Department of Foreign Affairs, relative to your request for a Certificate of Tax Exemption from the value-added tax amounting to P43,636.36 on your purchase from Citimotors, Inc. of Mitsubishi L-200 Double Cab Diesel Engine for Philippine Development Assistance Program (PDAP) a project allegedly funded by the Canadian International Development Academy (CIDA). In reply, please be informed that pursuant to the Vienna Convention on Diplomatic Relations stating: "ARTICLE 34 "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: (a) indirect taxes of a kind which are normally incorporated in the price of the goods or services;" xxx xxx xxx the tax exemption of the Embassy or its diplomatic agents does not include exemption from the value-added tax. In other words, purchases of locally-produced automobiles by the Embassy shall be subject to both VAT and excise tax under Sections 100(a) and 149, respectively, in relation to Section 126, all of the Tax Code, as amended by Executive Order No. 273. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue