Embassy of the United States of America

September 13, 2019 DA ITAD BIR RULING NO. 033-19 Principle of Reciprocity; BIR Ruling No. ITAD-053-14 Embassy of the United States of America 1201 Roxas Boulevard Manila, Philippines 1000 Attention: AAA __________ Gentlemen : This has reference to your Note No. 1839 dated August 12, 2019 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from the payment of value-added (VAT) and ad valorem taxes on the local purchase of two (2) motor vehicles for the official use of the Embassy of the United States of America, specifically described as follows: Make and Model Model Year Chassis Number Motor/Engine No. Color Toyota FJ Cruiser 4.0L V6 A/T F3-004 2019 JTEBU11F4KK253346 1GRC000461 White/Black Fortuner 4x4 V Dsl AT 6X-010 2019 MHFHA3FS7K0568814 1GD4696173 Attitude Black Mica 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 the goods and services; xxx xxx xxx" 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/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 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 United States of America and/or its personnel on their local purchase of motor vehicles since it appears from the list submitted by the DFA dated February 11, 2019, that the Government of the United States of America allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in the United States. In view thereof, the local sale of one (1) unit of Toyota FJ Cruiser 4.0L V6 A/T F3-004 and one (1) unit of Fortuner 4x4 V Dsl AT 6X-010 for the official use of the Embassy of the United States of America, being an entity exempt from VAT, 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 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