Embassy of the Federal Republic of Germany

January 9, 2023 DA ITAD BIR RULING NO. 001-23 Principle of Reciprocity; BIR Ruling No. ITAD-293-11 Embassy of the Federal Republic of Germany 25th Floor, The RCBC Plaza, Tower 2 6819 Ayala Avenue, Makati City Attention: AAA __________ Gentlemen : This refers to your Note KFZ No. 75/2022 dated December 14, 2022 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added (VAT) and ad valorem taxes imposed on the local purchase of motor vehicle for the official use of the Embassy of the Federal Republic of Germany, specifically described as follows: MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Honda ADV 160 2023 Black MH1KF5172PK005001 KF51E7005031 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations states that 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, thus: HTcADC "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" In other words, purchases by the 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 (NIRC) of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office hereby confirms the VAT and ad valorem tax exemption of the Embassy of the Federal Republic of Germany and/or its personnel on their local purchase of motor vehicles since it appears from the DFA VAT Matrix dated September 5, 2022 that the Government of Germany allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Germany. In view thereof, the local sale of one (1) unit of 2023 Honda ADV 160 for the official use of the Embassy of the Federal Republic of Germany, being an exempt entity, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (b) of the NIRC of 1997, as amended. Such sale is likewise exempt from ad valorem tax pursuant to Section 9 of Revenue Regulations No. 25-2003. CAIHTE This ruling is issued on the basis of the facts as represented. However, if it will be disclosed upon investigation that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO Assistant Commissioner Legal Service