United Nations World Food Programme

March 14, 2023 DA ITAD BIR RULING NO. 014-23 Sec. 106 (A) (2) (b), Tax Code, as amended; Article V, PH-WFP Agreement; Article III (Section 10), SA Convention United Nations World Food Programme 11th Floor, South Tower, Rockwell Business Center United Street corner Sheridan Street 1554 Mandaluyong City Attention: AAA __________ Gentlemen : This refers to your letter dated February 20, 2023 indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting exemption from value-added tax (VAT) and ad valorem tax on the local purchase of motor vehicle for the official use of the United Nations World Food Programme (UNWFP), specifically described as follows: AaCTcI MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Toyota Hilux 2.8L 4x4 GR-S AT 2023 Super White II MR0BA3CD3N0162879 1GD5261310 Under Article V of the Basic Agreement concerning assistance from the World Food Programme (PH-WFP Agreement), 1 the Philippines is obligated to apply the provisions of the Convention on the Privileges and Immunities of the Specialized Agencies (SA Convention) to the UNWFP, its property, funds and assets, and to its officials and consultants, to wit: " Article V FACILITIES, PRIVILEGES AND IMMUNITIES 1. The Government shall afford to officials and consultants of the World Food Program and to other persons performing services on behalf of the Program such facilities as are afforded to those of the United Nations and specialized agencies. 2. The Government shall apply the provisions of the Convention on the privileges and immunities of the specialized agencies to the World Food Program, its property, funds and assets and to its officials and consultants. acEHCD xxx xxx xxx" Relative thereto, Article III, Section 10 of the SA Convention states that: " Article III PROPERTY, FUNDS AND ASSETS xxx xxx xxx Section 10. While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which forms part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or are chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax." Applying the above provisions, UNWFP may be entitled to a possible remission or return of the amount of duty or tax paid on its purchases provided the property acquired is for its official use. Considering that the subject motor vehicle is for the official use of the UNWFP, it is, therefore, exempt from the payment of any tax imposed thereon. Moreover, pursuant to Section 106 (A) (2) (b) of the National Internal Revenue Code of 1997 (Tax Code), as amended, sales of goods by VAT-registered sellers to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate, are subject to VAT at zero percent (0%) rate, thus: "SEC. 106. Value-Added Tax on Sale of Goods or Properties. (A) Rate and Base of Tax . There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value-added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor. (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: xxx xxx xxx (b) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate." Accordingly, the local sale of 2023 Toyota Hilux 2.8L 4x4 GR-S AT by the VAT-registered local car dealer for the official use of the UNWFP is subject to VAT at zero-percent (0%) rate. Such sale is likewise exempt from ad valorem tax pursuant to Section 9 of Revenue Regulations No. 25-2003. EcTCAD 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, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO Assistant Commissioner Legal Service Footnotes 1. Signed on July 2, 1968, and came into force on October 3, 1972.