Royal Norwegian Embassy

January 28, 2022 DA ITAD BIR RULING NO. 002-22 Section 105, Tax Code Royal Norwegian Embassy 12th Floor, DelRosarioLaw Centre 21st Drive corner 20th Drive 1630 Taguig City Gentlemen : This refers to your Note No. 10/22 dated January 25, 2022 referred to this Office by the Department of Finance and the Department of Foreign Affairs requesting exemption from the payment of value-added tax (VAT) and ad valorem tax on the sale of a second-hand motor vehicle by ___________________________ of the Royal Norwegian Embassy, to _____________________________ of the same Embassy, specifically described as follows: MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Mitsubishi Montero SPT GLS SUV 2012 Savanna White MMBGYKG40CF021245 4D56UCDJ0371 In reply, please be informed that Section 105 of the National Internal Revenue Code of 1997, as amended (Tax Code) provides, to wit: SEC. 105. Persons Liable. Any person who, in the course of trade or business , sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code. x x x (Emphasis ours) The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Except for zero-rated sale of goods and services, VAT is generally imposed at 12%. In this case, _________________ is not a VAT-registered taxpayer and is not engaged in trade or business. Hence, the subject sale of a 2012 Mitsubishi Montero by __________________________ is exempt from VAT. Such sale is likewise exempt from ad valorem tax pursuant to Section 9 of Revenue Regulations No. 25-2003. CTIEac 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, (SGD.) LARRY M. BARCELO Assistant Commissioner Legal Service