Embassy of the State of Kuwait

September 23, 2022 DA ITAD BIR RULING NO. 042-22 Principle of Reciprocity; BIR Ruling No. ITAD-314-11 Embassy of the State of Kuwait 8th Floor, Total Corporate Center, Kalayaan Avenue Fort Bonifacio Global City 1634 Taguig City Gentlemen : This refers to your Note No. EKM-22-098 dated August 31, 2022 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 imposed on the local purchase of motor vehicle for the personal use of Meshel A.M.M.H. Alsaied, Counsellor and Deputy Head of Mission of the Embassy of the State of Kuwait, specifically described as follows: MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Harley-Davidson FLHRXS Road King Special 2022 Black MLY1KVP04NS654364 KVPN654364 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations states that 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, thus: " 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" In other words, purchases by the 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 (NIRC) of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office hereby confines the VAT and ad valorem tax exemption of the Embassy of the State of Kuwait and/or its personnel on their local purchase of motor vehicles since it appears from the DFA VAT Matrix dated September 5, 2022 that the Government of the State of Kuwait allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Kuwait. In view thereof, the local sale of one (1) unit of 2022 Harley-Davidson FLHRXS Road King Special for the personal use of Meshel A.M.M.H. Alsaied of the Embassy of the State of Kuwait, being 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. This ruling is issued on the basis of the facts as represented. However, if it will be disclosed upon investigation 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 Assistant Commissioner Legal Service