DA ITAD BIR Ruling No. 044-14

May 27, 2014 DA ITAD BIR RULING NO. 044-14 Principle of Reciprocity; BIR Ruling No. ITAD-053-14 Embassy of the United States of America 1201 Roxas Boulevard Manila, Philippines 1000 Attention: Mr. Ramon R. Taruc Attach Gentlemen : This has reference to your Note No. 0091 dated January 31, 2014 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 personal use of Mr. Samuel Moses Keys , Airborne Mission Technician of the Embassy of the United States of America from Mr. Jeremy Little , Third Secretary of the same Embassy, specifically described as follows: Make Model Color Chassis Number Engine Number Plate Number Toyota RAV 4 2008 Black JTMBK35V285066363 2GR0548916 OEV-28081 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 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 United States of America 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 the United States of America allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in the United States. STIcEA Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2008 Toyota RAV 4 by Mr. Jeremy Little to Mr. Samuel Moses Keys , for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-053-14 dated May 15, 2014) 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.) MARISSA O. CABREROS Assistant Commissioner Legal Service