Royal Embassy of Cambodia

March 27, 2018 DA ITAD BIR RULING NO. 013-18 Principle of Reciprocity; BIR Ruling No. ITAD-095-13 Royal Embassy of Cambodia Unit 7A-B/7th Floor, Country Space One Bldg. Sen. Gil Puyat Avenue, 1200 Makati City Gentlemen : This has reference to your Note No. 047/18/REC.M dated February 21, 2018 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 local purchase of a motor vehicle for the official use of the Royal Embassy of Cambodia, specifically described as follows: TIADCc Type of Use: Official Make: Toyota Innova 2.0 E Gas AT Model Year: 2018 Color: Thermalyte Frame Number: PA2JW8EMXJ3152591 Engine Number: 1TRA427246 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 Cambodia and/or its personnel on their local purchase of motor vehicles, it appearing from the list submitted by the DFA dated February 2, 2018 that the Government of Cambodia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Cambodia. In view thereof, the local purchase of one (1) unit of 2018 Toyota Innova 2.0 E Gas AT for the official use of the Royal Embassy of Cambodia, being an exempt entity, shall be subject to VAT at zero-percent (0%) rate and exempt from ad valorem tax pursuant to Section 106 (A) (2) (c) of the NIRC of 1997 as amended. (BIR Ruling No. ITAD-095-13 dated April 5, 2013) 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