BIR Ruling [UN-085-94]

March 7, 1994 BIR RULING [UN-085-94] Embassy of Brazil Makati, Metro Manila Gentlemen : This refers to your Note No. 010 dated January 31, 1994 which was referred to this Office by the Department of Finance relative to your request for tax exemption for the purchase at one (1) unit 1994 MAZDA 626 from the Makati Autocenter, Inc. cdtech In reply, I have the honor to inform you that under Articles 24 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1961, diplomatic agents shall be exempted 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 on 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 is the receiving State; (e) charges levied for specific services rendered; (f) registration, court 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., and ad valorem tax and VAT. However, under the principle of reciprocity, this office may grant tax exemption to the Embassy of Brazil 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 personnel on their purchase of goods and services in your territory. Per you said Note No. 010, the Philippine Embassy in Brasilia is granted exemption from all taxes and duties in the purchase of its official vehicles. VAT must however be paid if the car is later sold to non-privileged person. Such being the case, the Embassy of Brazil is exempt from the ad valorem and value-added taxes on its local purchase of a motor vehicle. (BIR Ruling No. 333-92 dated October 27, 1992) cd Very truly yours, JAIME M. MAZA Assistant Commissioner (Legal Service) By: ALICIA P. CLEMENO Head rev. Executive Assistant Legal Service