Royal Embassy of Saudi Arabia

February 13, 2020 DA ITAD BIR RULING NO. 006-20 Principle of Reciprocity; BIR Ruling No. ITAD-312-12 Royal Embassy of Saudi Arabia 128 H.V. Dela Costa cor. Sanchez Streets Salcedo Village, Makati City Gentlemen : This has reference to your Note No. 10/797 dated December 10, 2019 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 (VAT) and ad valorem taxes on the local purchase of a motor vehicle for the official use of the Royal Embassy of Saudi Arabia, specifically described as follows: HTcADC Type of Use: Official Make: Toyota Innova Model Year: 2019 Color: Black Frame Number: PA2GA8EM9K0068631 Engine Number: 1GD0710096 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 Royal Embassy of Saudi Arabia and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated February 6, 2020 that the Government of Saudi Arabia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Saudi Arabia. In view thereof, the local sale of one (1) unit 2019 Toyota Innova for the official use of the Royal Embassy of Saudi Arabia, being an exempt entity, shall be subject to VAT at zero-percent (0%) rate and exempted from ad valorem tax pursuant to Section 106 (A) (2) (b) of the NIRC of 1997 as amended. (BIR Ruling No. ITAD-312-12 dated August 10, 2012) CAIHTE 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