Embassy of France

March 15, 2023 DA ITAD BIR RULING NO. 015-23 Principle of Reciprocity; BIR Ruling No. ITAD-017-19 Embassy of France 16th Floor Pacific Star Bldg., Sen. Gil Puyat cor. Makati Avenue 1200 Makati City Gentlemen : This refers to your Note No. 2023-0074882 dated February 23, 2023 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added (VAT) and ad valorem taxes imposed on the local purchase of motor vehicle for the official use of the Embassy of France, specifically described as follows: AIDSTE MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Toyota Hiace Commuter Deluxe 2.8 MT 2023 White JTFNAFAPXN8030513 1GD9077679 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations states that the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT and ad valorem tax, which are indirect taxes, on their local purchase of goods and services, thus: " 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" In other words, purchases by the Embassy or its agents of goods and/or services shall, in general, be subject to the VAT and ad valorem tax under Sections 106 and 149 of the National Internal Revenue Code (NIRC) of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office hereby confirms the VAT and ad valorem tax exemption of the Embassy of France and/or its personnel on their local purchase of motor vehicles since it appears from the DFA VAT Matrix dated September 5, 2022 that the Government of France allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in France. SDAaTC In view thereof, the local sale of one (1) unit of 2023 Toyota Hiace Commuter Deluxe 2.8 MT for the official use of the Embassy of France, being an exempt entity, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (b) of the NIRC of 1997, as amended. Such sale is likewise exempt from ad valorem tax pursuant to Section 9 of Revenue Regulations No. 25-2003. 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