Delegation of the European Union

August 10, 2018 DA ITAD BIR RULING NO. 034-18 Principle of Reciprocity; BIR Ruling No. ITAD-291-11 Delegation of the European Union to the Philippines 30th Floor, Tower II, RCBC Plaza, 6819 Ayala Avenue Makati City, 1200, Philippines Attention: AAA _______________ Gentlemen : This has reference to your Note No. 116/2018 dated July 12, 2018 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 on the purchase of a previously owned and tax-exempt motor vehicle for personal use of BBB ,_______________ of the Delegation of the European Union from CCC ,_______________, also of the Delegation of the European Union, specifically described as follows: cSaATC Make Model Color Chassis Number Engine Number Hyundai Tucson Theta 2.0L GL 2WD A/T 2011 Silky Bronze KMHJT81BBBU365493 G4KDBU481083 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 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/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 personnel of the Delegation of the European Union with headquarters located in Brussels, Belgium, which is considered as the de facto capital of EU, on his/her local purchase of motor vehicles since it appears from the list submitted by the DFA dated February 2, 2018 that the Government of the Kingdom of Belgium allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Belgium. Hence, since the transferor and the transferee of the subject motor vehicle, are exempt individuals, the sale of one (1) unit of 2011 Hyundai Tucson Theta 2.0L GL 2WD A/T by CCC to BBB, for the latter's personal use continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-291-11 dated November 23, 2011) 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