Indonesian Embassy's Purchase of Honda Car Exempt from Taxes

July 8, 1993 BIR RULING NO. 318-93 INDONESIAN EMBASSY'S PURCHASE OF HONDA CAR EXEMPT FROM TAXES 99, 149 206-93 318-93 Embassy of the Republic of Indonesia Indonesian Embassy Building # 185 Salcedo Street Legaspi Village, Makati Metro Manila This refers to your letter No. PK/0764 B/93 dated June 17, 1993 which was referred to this Office by the Department of Foreign Affairs, relative to your request for exemption from the payment of taxes on your local purchase of one (1) unit of Honda car from Honda Car Philippines, Inc. 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: cdtech (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; (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 exemptions of diplomatic agents/representatives do not include exemption from indirect taxes of a kind which are normally incorporated in their purchase 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 Embassy of the Republic of Indonesia 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 exemption to Filipino Embassy or its personnel on their purchase of goods and services in your territory. Per your letter No. PK/0854 B/93 dated July 1, 1993 addressed to the Department of Finance (cc. BIR), you informed this Office that Philippine diplomatic mission in Indonesia is granted the same privileges of tax exemption as the Indonesian diplomatic mission here in the Philippines. The exemption in the latter case includes VAT for which those 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 Embassy of the Republic of Indonesia is exempt from the ad valorem and value-added taxes on its local purchase of a motor vehicle. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue