Denial of Request for VAT Exemption for Purchase of Motor Vehicle by World Bank's Senior Projects Manager

October 15, 1999 BIR RULING NO. 162-99 World Bank 20/F Taipan Place Bldg. Ortigas Center, Pasig City Attention: Mr . Vinay Bhargava Country Director Gentlemen : This refers to your letter dated July 29, 1999 requesting in effect, for exemption from the payment of the value-added tax (VAT) and ad valorem tax for the purchase by Mr. Ramesh Bhatia, Senior Projects Manager of the World Bank of one (1) unit motor vehicle, more particularly described as follows: Make and Model : Honda CRV A/T Model Year : 1999 Chassis Number : PADRD 1830WV003889 Motor/Engine Number : PEWD7-P103883 Color : Heather mist silver In reply, please be informed that Section 8, Article VII of the Articles of Agreement of the International Bank for Reconstruction and Development (World Bank), provides, viz: "Article VII "Section 8. Immunities and privileges of officers and employees All governors, executive directors, alternates, officers and employees of the Bank: (i) shall be immune from legal process with respect to acts performed by them in their official capacity except when the Bank waives this immunity; cdta (ii) not being local nationals, shall be accorded the same immunities from immigration restrictions, alien registration requirements and national service obligations and the same facilities as regards exchange restrictions as are accorded by members to the representatives, officials, and employees of comparable rank of other members; (iii) shall be granted the same treatment in respect of travelling facilities as is accorded by members to representatives, officials and employees of comparable rank of other members. Hence, exemption from the payment of value-added tax and ad valorem tax on the purchase of motor vehicle is not one of the privileges accorded to all governors, executive directors, alternates, officers and employees of the Bank. Moreover, Section 10 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations, wherein the Philippine Instrument of ratification was signed by the President on August 30, 1949 and another instrument of ratification was signed by the President on February 21, 1959 applying the Convention to WHO, FAO, IBRD, IMF, UNESCO, ICAO and ILO, provides, viz: "Section 10 "While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable , States parties to this Convention will, whenever possible make appropriate administrative arrangements for the remission or return of the amount of duty or tax." (emphasis supplied) On the basis of the foregoing, we regret to inform you that your request for exemption from the payment of the value-added tax (VAT) and ad valorem tax for the purchase by Mr. Ramesh Bhatia of one (1) unit motor vehicle for his personal use, is hereby denied for lack of legal basis. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue