Australian Embassy's Purchase of Car - Not Subject to VAT

July 29, 1993 BIR RULING NO. 340-93 AUSTRALIAN EMBASSY'S PURCHASE OF CAR NOT SUBJECT TO VAT VAT 017-99 93 340-93 Australian Embassy Manila This refers to your Note Verbale No. 193/3 dated May 21, 1993 which was referred to this Office by the Department of Finance, relative to your request for exemption from the payment of tax on your purchaser of One (1) unit locally assembled Susuki SJ413 4 x 4 Samurai intended for the official use in the Australian Centre for International Agricultural Research (ACIAR) Project No. 9130 entitled "Improving Fish Production in Freshwater Aquaculture and in Estuaries by Reducing Losses due to Epizootic Ulcerative Syndrome. cdtech 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 exemptions of 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 on their local purchases of goods and services. Such being the case, your request for exemption cannot be given due course. However, under the principle of reciprocity, this Office may consider granting tax exemption to your 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 personnel on their purchase of goods and services in your territory. cdtech LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue