Embassy of the Russian Federation

February 26, 2018 DA ITAD BIR RULING NO. 004-18 Principle of Reciprocity; BIR Ruling No. ITAD-372-12 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village 1220 Makati City Attention: AAA __________ Gentlemen : This has reference to your report of sale of a tax-exempt, locally purchased motor vehicle of BBB , Employee of the Embassy, to CCC , Employee of the same Embassy, referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the reflection of the consummated sale, specifically described as follows: ATICcS Make Model Color Chassis Number Engine Number Nissan X-Trail 2011 Brownish TDBNLJWT31A13437 QR25030236B 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 VAT and ad valorem tax exemption of the Embassy of the Russian Federation and/or its personnel on their local purchase of motor vehicles since it appears from the list submitted by the DFA dated February 2, 2018 that the Government of the Russian Federation allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in the Russian Federation. Hence, since the transferor and the transferee of the subject motor vehicle, are exempt individuals, the sale of one (1) unit of 2011 Nissan X-Trail by BBB to CCC for the latter's personal use continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-372-12 dated November 13, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO Head Revenue Executive Assistant Legal Service