DA ITAD BIR Ruling No. 044-13

September 26, 2013 DA ITAD BIR RULING NO. 044-13 Principle of Reciprocity; BIR Ruling No. ITAD-301-11 Embassy of Canada Levels 6-8, Tower 2, RCBC Plaza Bldg. Ayala Avenue, Makati City Attention: Ms. Idania Riley Second Secretary Gentlemen : This has reference to your Note No. 31-168 dated August 16, 2013 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 Ms. Idania Riley, Second Secretary of the Embassy of Canada from Mr. Alex George, Second Secretary of the same Embassy, specifically described as follows: Make Model Color Chassis Number Engine Number Plate Number Honda CRV 2004 Blue PADRD58503V100272 PRLD65-3100267 DC 3915 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; cHSIAC 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 Canada and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated July 23, 2013 that the Government of Canada allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in Canada. Hence, since the transferor and the transferee of the subject motor vehicle, both of the Embassy of Canada, are VAT exempt individuals, the sale of one (1) unit 2004 Honda CRV by Mr. Alex George to Ms. Idania Riley, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-301-11 dated December 1, 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. DaTHAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) ESTELA V. SALES Deputy Commissioner Legal Group