Embassy of the Russian Federation

August 20, 2019 DA ITAD BIR RULING NO. 032-19 Principle of Reciprocity; BIR Ruling No. ITAD-372-12 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: AAA __________ Gentlemen : This refers to Note Nos. 370-n and 369-n both dated 22 July 2019 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 two (2) motor vehicles for the official use of the Embassy of the Russian Federation, specifically described as follows: Make: 2019 Toyota Fortuner 2.4 4x2 G DSL A/T 2019 Toyota Camry 2.5 V A/T Motor/Engine No.: 2GD4675649 2AR2167134 Frame/Chassis No.: MHFJB8GS9K1570293 MR2BF3HK5K4003642 Color: Phantom Brown Metallic Platinum White Pearl 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 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 to the Embassy of the Russian Federation and/or its personnel on their local purchase of motor vehicles since it appears from the list submitted by the DFA dated 11 February 2019, that the Government of the Russian Federation allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in the Russian Federation. In view thereof, the local purchase of motor vehicles consisting of one (1) unit of 2019 Toyota Fortuner 2.4 4x2 G DSL A/T, and, one (1) unit Toyota Camry 2.5 V A/T, for the official use of the Embassy of the Russian Federation, 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) (b) of the NIRC of 1997, as amended. ( BIR Ruling No. ITAD-372-12 dated 13 November 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. CAIHTE Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO OIC-Assistant Commissioner Legal Service