DA ITAD BIR Ruling No. 044-06

April 25, 2006 DA ITAD BIR RULING NO. 044-06 Sec 106, 108 & 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. ITAD-19-04 Embassy of Australia Level 23, Tower 2, RCBC Plaza 6819 Ayala Ave. cor. Sen. Gil Puyat Ave. Makati City Attention: Mr. James Alan Braithwaite First Secretary Gentlemen : This has reference to your Note No. 107/06 and File No. MN94/00109 dated March 27, 2006 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), Office of Protocol, requesting for the exemption from payment of ad valorem and value-added taxes (VAT) on the local purchase of one (1) unit motor vehicle for the personal use of Mr. James Alan Braithwaite, First Secretary of the Embassy of Australia, specifically described as follows: Make: Honda CRV 2.0 AT 2WD 8 seater Model Year: 2006 Color: Nighthawk Black Engine Number: PNKD77-6401733 Frame Number: PADRD48706V401737 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: EScaIT "(a) indirect taxes of a kind which are normally incorporated in the price of goods or services; "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the VAT and ad valorem tax 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 value-added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Australia or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005 that your Government allows similar exemption to Philippine Embassy personnel on their purchases of goods and services in your country. Hence, the herein local purchase of one (1) unit of 2006 Honda CRV 2.0 A/T 2WD 8 seater for the personal use of Mr. James Alan Braithwaite is exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-19-04 dated February 23, 2004) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service