BIR Ruling [UN-282-95]

July 31, 1995 BIR RULING [UN-282-95] Canadian Embassy 9th Floor, Allied Bank Center 6754 Ayala Avenue, Makati City Metro Manila Attention: Mr . David R . Morris First Secretary (Development) Gentlemen : This refers to your Note No. 097-95 dated May 18, 1995 which was referred to this Office by the Department of Finance, relative to your request for the issuance of a VAT exemption certificate on your purchase of one (1) unit 1995 Toyota Tamaraw FX with Chassis no. KF50-909581 and Motor/Engine No. SK-1220387 for the official use of the Entrepreneur Support Project Region VI, c/o Canadian International Development Agency (CIDA), Canadian Embassy. In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which reads: cdll "ARTICLE 34 "A diplomatic agent 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 the goods and services; "xxx xxx xxx the tax exemption privilege of the Embassy or its diplomatic agents does not include exemption from the value-added tax or excise tax on its local purchases of goods. In other words, purchases by the Embassy of locally-manufactured utility vehicles classified as automobiles shall be subject to both VAT and excise tax under Section 100(a) and 149, respectively, in relation to Section 126 of the Tax Code, as amended by E.O. No. 273. (BIR Ruling No. 091-92) However, under the principle of reciprocity, this Office may grant exemption to the Embassy of Canada or its personnel on their local purchases of goods and/or services provided 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 privilege to the Philippine Embassy or its personnel on purchases of goods and/or services in your territory. Per list submitted by the Office of the Protocol, Department of Foreign Affairs, Manila, the Canadian Embassy is one of the embassies exempted from value-added tax and other local taxes imposed on local purchases of goods and services. Such being the case, the Canadian Embassy is exempt from the ad valorem and value-added taxes on its local purchase of the aforesaid 1995 Toyota Tamaraw FX. (BIR Ruling No. 318-93 dated July 8, 1993; UN-046-94 dated February 8, 1994) aisadc Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)