BIR Ruling [UN-249-95]

July 6, 1995 BIR RULING [UN-249-95] Kedutaan Besar Malaysia (Embassy of Malaysia) 107 Tordesillas Street Salcedo Village Makati, Metro Manila Attention: Oman Haji Musa Third Secretary Consular/Protocol Gentlemen : This refers to your Note Verbale No. 950126 dated March 7, 1995 which was referred to this Office by the Department of Finance, relative to your request for tax exemption of the purchase of one (1) unit locally assembled 1995 Proton Wira Automatic 1.6 Aeroback (5 Door LUD) for the personal use of H. E. Ambassador Dato Zainnudin A. Rahman. In reply, please be informed that under Article 34of 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: cdlex (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 at 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) registrations, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provision of Article 23. It is clear from the foregoing that the tax exemption 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. However, under the principle of reciprocity, this Office may grant tax exemption to the Kedutaan Besar Malaysia (Embassy of Malaysia) or its personnel on their local purchases of goods and services, provided that you can submit to the Commissioner of Internal Revenue of 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 your letter dated May 5, 1995 addressed to the Commissioner, Bureau of Internal Revenue and signed by your Third Secretary (Consular/Protocol), Omar D. Musa, the Philippine Heads of Mission or Post, during their tour of duty have certain privileges such as tax-exemptions given by the Malaysian government. Such being the case, the Kedutaan Besar Malaysia (Embassy of Malaysia) is exempt from the ad valorem and value added taxes on its local purchase of a motor vehicles, VAT and ad-valorem tax must however he paid if the car is later sold to a non privileged person (BIR Rulings No. 206 93 dated May 11, 1995). prll Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)