DA ITAD BIR Ruling No. 043-12

December 12, 2012 DA ITAD BIR RULING NO. 043-12 Secs. 106 & 108 of the NIRC of 1997, as amended Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-372-12 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: Mr. Nikolay Subbotin Gentlemen : This has reference to your Note No. 144/W dated October 11, 2012 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA),requesting for the exemption from the payment of value-added tax (VAT) on the purchase of a previously-owned and tax-exempted motor vehicle for the personal use of Mr. Nikolay Subbotin, staff member of the Embassy of the Russian Federation from the Embassy of the Russian Federation, specifically described as follows: Make Model Chassis Number Engine Number Plate Year Number Toyota Corolla 2006 ZZE121-8019088 3ZZ-4546368 DC 5417 1.6 A/T 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; EICScD xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the Russian Federation and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated October 8, 2012 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. Hence, since the transferor and the transferee of the subject motor vehicle, both of the Embassy of the Russian Federation, are VAT exempt, the sale of one (1) unit 2006 Toyota Corolla 1.6 A/T by the Embassy of the Russian Federation to Mr. Nikolay Subbotin, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-372-12 dated November 13, 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. Very truly yours, (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service