United Nations High Commissioner for Refugees

August 8, 2019 DA ITAD BIR RULING NO. 030-19 Section 106 (A) (2) (b), 1997 NIRC, as amended; Section 9, Revenue Regulations No. 25-2003; Section 8, Article II, Convention on the Privileges and Immunities of the United Nations; BIR Ruling No. ITAD-307-13 United Nations High Commissioner for Refugees 6th Floor, GC Corporate Plaza 150 Legaspi Street, Legaspi Village Makati City Attention: AAA __________ Gentlemen : This refers to your Note No. MNL/300/2019/SK/al dated June 27, 2019 indorsed to this Office by the Department of Finance and the Department of Foreign Affairs, requesting exemption from value-added (VAT) and ad valorem taxes on the local purchase of one (1) unit of motor vehicle, for the official use of the United Nations High Commissioner for Refugees (UNHCR), specifically described as follows: Type of Use: Official Make: Toyota Camry 2.5V AT Model Year: 2019 Color: Platinum White Pearl Frame Number: MR2BF3HK9K4003823 Engine Number: 2AR2171436 In reply, please be informed that Section 106 (A) (2) (b) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, provides, viz. : "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, a 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: xxx xxx xxx (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. " Relative thereto, Section 8, Article II of the Convention on the Privileges and Immunities of the United Nations 1 ("UN Convention") adopted by the General Assembly of the United Nations on 13 February 1946 applies. It provides: " Article II PROPERTY, FUNDS AND ASSETS xxx xxx xxx The aforecited provision of the UN Convention clearly requires that to be entitled to a possible remission or return of the amount of duty or tax, the subject purchase must be for official use of the UN. But in lieu of remission or return of the amount of duty or tax related to the purchase for official use, a tax exemption privilege is instead granted. 2 In relation thereto, Section 109 (1) (K) of the 1997 National Internal Revenue Code (NIRC), as amended, provides as follows: CAIHTE " SEC. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529; " Hence, this Office is of the opinion as it hereby rules that the sale of one (1) unit of 2019 Toyota Camry 2.5V AT by the VAT-registered local car dealer for the official use of UNHCR, an exempt entity pursuant to the UN Convention, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (b) of the NIRC, as amended. Such sale is likewise exempt from ad valorem tax pursuant to the UN Convention, as implemented under Section 9 of Revenue Regulations No. 25-2003. 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 Footnotes 1. Adopted by the General Assembly on February 13, 1946. 2. BIR Ruling No. ITAD-46-07 dated 11 April 2007 citing VAT Ruling No. 143-90 which revoked VAT Ruling No. 176-89.