The Royal Thai Embassy

October 16, 2020 DA ITAD BIR RULING NO. 019-20 Principle of Reciprocity; BIR Ruling No. ITAD-314-12 The Royal Thai Embassy 107 Thailand (Rada) Street Legaspi Village 1229 Makati City Attention: AAA _______________ Gentlemen : This refers to your Note No. 40001/439 dated 25 September 2020 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem tax on the local purchase of a motor vehicle for the official use of the Royal Thai Embassy, specifically described as follows: ETHIDa Type of Use: Official Make: 2020 Honda Odyssey 2.4 EX-V Navi CVT Color: Premium Twinkle Black Pearl Motor/Engine No.: K24W72512363 Frame/Chassis No.: JHMRC1850LC202724 CS No.: _______ 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 goods or services; x x x." (Underscoring supplied) Thus, 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. In other words, purchases by that Embassy or its agents of goods and services shall, in general, be subject to 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 may confirm VAT and ad valorem tax exemption in favor of the Royal Thai Embassy on its local purchase of motor vehicles since it appears from the list submitted by the DFA dated 01 October 2020 that the Government of the Kingdom of Thailand allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Bangkok. In view thereof, the local purchase of one (1) unit of 2020 Honda Odyssey 2.4 EX-V Navi CVT, for the official use of the Royal Thai Embassy, 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. (BIR Ruling No. ITAD-314-12 dated 10 August 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 OIC-Assistant Commissioner Legal Service