Grant of Request for Tax Exemption on the Purchase of Motor Vehicle by World Bank Officer

November 29, 1999 BIR RULING NO. 187-99 106 (A); 149-000-00-187-99 World Bank 20/F Taipan Place Building Ortigas Center, Pasig City Attention: Mr . Aloysius Ordu Acting Country Director S i r : This refers to your letter dated October 21, 1999 requesting reconsideration of BIR Ruling No. 162-99 dated October 15, 1999 wherein this office denied your request for exemption from the payment of VAT and ad valorem tax on the purchase by Mr. Ramesh Bhatia of one unit Honda motor vehicle. cdll In reply, please be informed that after a careful re-study of the case, this Office has finally decided to grant your aforesaid request. Under Section VII, Article XIII (h) of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank) concerning Establishment of a Resident Mission in the Republic of the Philippines, it is provided therein that "VII. "Officers, Experts and Consultants of the Bank "Article XIII Officers, experts, persons on secondment and consultants of the Bank assigned to perform service with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: xxx xxx xxx "(h) except with respect to nationals or permanent residents of the Philippines, the right to import and export or sell their furniture and effects, including motor vehicles and spare parts therefor subject to payment of applicable taxes thereon if sold to and enjoying the same privileges and immunities as regards goods, including motor fuel, purchased in the Philippines as are accorded in the Philippines to the resident members of diplomatic and international organizations " In addition, paragraph (j) thereof also grants to the officers, experts, persons on secondment and consultants of the World Bank "all such exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations" . From the foregoing, it is clear that the aforenamed officer of World Bank is entitled to exemption not only from direct taxes but also from indirect taxes, e.g., VAT and ad valorem tax on his local purchase of goods. The evident intention of the aforequoted provisions of the Establishment Agreement is to place the officers of World Bank at par with the officers of other international organizations in so far as exemption from indirect taxes is concerned. One such organization, is the Asian Development Bank (ADB) whose officers are granted exemption from VAT and ad valorem tax on their local purchase of motor vehicles pursuant to Department Order No. 43-89 of the Department of Finance. Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with precedent rulings granting VAT and ad valorem tax exemption to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request in behalf of Mr. Ramesh Bhatia, Senior Projects Manager of the World Bank, for exemption from VAT and ad valorem tax imposed under Sections 106(A) and 149 of the 1997 Tax Code on his purchase of one (1) unit Honda motor vehicle for his official use, is hereby granted. This revokes BIR Ruling No. 162-99 dated October 15, 1999. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue