Embassy of the Independent State of Papua New Guinea

January 15, 2019 DA ITAD BIR RULING NO. 001-19 Principle of Reciprocity; BIR Ruling No. ITAD-399-12 Embassy of the Independent State of Papua New Guinea 3rd Floor, Corinthian Plaza Condominium Bldg. Paseo de Roxas, Legaspi Village, Makati City Gentlemen : This has reference to your Note No. 84.2018 dated December 13, 2018 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA),requesting exemption from the payment of value-added (VAT) and ad valorem taxes on the purchase from the Embassy of the Independent State of Papua New Guinea of a previously owned and tax exempt motor vehicle for personal use of AAA ,__________ of the same Embassy, specifically described as follows: Make Model Year Chassis Number Engine Number Plate Number Toyota Camry 3.0 2005 MCV304500373 1MZ1706836 __________ In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: " 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" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT and ad valorem tax, which are indirect taxes, on their local purchase of goods and services. In other words, purchases by that Embassy or its agents of goods and/or services shall, in general, be subject to the VAT and ad valorem tax under Sections 106 and 149 of the National Internal Revenue Code of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office may confirm VAT and ad valorem tax exemption to the Embassy of the Independent State of Papua New Guinea and/or its personnel on their local purchase of motor vehicles since it appears from the list submitted by the DFA dated December 10, 2018, hat the Government of the Independent State of Papua New Guinea allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in Papua New Guinea. Hence, since the transferor and the transferee of the subject motor vehicle are exempt entity and individual, the sale of a one (1) unit of 2005 Toyota Camry 3.0 by the Embassy of the Independent State of Papua New Guinea to AAA, for the latter's personal use, continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-399-12 dated December 20, 2012) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. CAIHTE Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO OIC-Assistant Commissioner Legal Service