Australian Embassy

January 29, 2018 DA ITAD BIR RULING NO. 003-18 Principle of Reciprocity; BIR Ruling No. ITAD-300-11 Australian Embassy Level 23 Tower 2 RCBC Plaza 6819 Ayala Avenue Makati City 1200 Gentlemen : This has reference to your Note No. 572/17 dated December 11, 2017 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from the payment of value-added tax (VAT) and ad valorem taxes on the purchase of a previously-owned and tax-exempted motor vehicle for personal use of AAA , __________ of the Australian Embassy from BBB , __________, also of the same Embassy, specifically described as follows: HEITAD Make Model Year Color Chassis Number Engine Number Plate Number Toyota Fortuner 2010 Silver MR0ZR69G600101237 2KD5099285 00000 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 on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm exemption of the Australian Embassy and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated November 22, 2017 that the Government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Australia. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2010 Toyota Fortuner by BBB to AAA, for the latter's personal use continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-300-11 dated December 1, 2011) 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service