UK Embassy Exempt from Tax for Purchase of One (1) Unit of Mazda

May 11, 1993 BIR RULING NO. 206-93 UK EMBASSY EXEMPT FROM TAX FOR PURCHASE OF ONE (1) UNIT OF MAZDA 99-149 333-92 206-93 British Embassy LV Locsin Building 6752 Ayala Avenue 1226 Makati, Metro Manila This refers to your Note No. 375-92, dated December 17, 1992, which was referred to this Office by the Department of Finance, relative to your request for tax exemption for the purchase of one (1) unit of MAZDA B2200 Double Cab Pick-up from Francisco Motors Corporation. In reply, I have the honor to inform you that under Article 34 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1961, diplomatic agents 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 goods or services; (b) dues and taxes on private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purpose of the mission; (c) estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of Article 39; (d) dues and taxes on private income having its source in the receiving State and capital taxes on investments made in commercial undertakings in the receiving State; (e) charges levied for specific services rendered; and (f) registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23. It is clear from the foregoing that the tax exemption on diplomatic agents/representatives do not include exemption from indirect taxes of a kind which are normally incorporated in their purchases of goods and services, e.g., ad valorem tax and VAT. However, under the principle of reciprocity, this Office may grant tax exemption to the British Embassy or its personnel on their local purchases of goods and services, provided that you can submit to the Commissioner of Internal Revenue or his duly authorized representative a copy of the special legislation or international agreement showing that your Government allows similar tax exemptions to Filipino Embassy personnel on their purchase of goods and services in your territory. Per your letter, dated April 7, 1993, addressed to the Commissioner and signed by your Management Officer, A. Loosemore, the Philippine diplomatic mission in the United Kingdom is granted the same privileges and immunities as the British diplomatic mission here in the Philippines, specifically, exemption in payment of taxes and duties on the purchase of locally assembled vehicles. The exemption in the latter case includes VAT for which these missions benefit from a special suspension of payment. VAT must however be paid if the car is later sold to a non-privileged person. Such being the case, the British Embassy is exempt from the ad valorem and value-added taxes on its local purchase of motor vehicle. cdta VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue