Royal Norwegian Embassy

September 24, 2018 DA ITAD BIR RULING NO. 044-18 Principle of Reciprocity; BIR Ruling No. ITAD-191-12 Royal Norwegian Embassy 21st Floor, Petron Mega Plaza Building 358 Senator Gil Puyat Avenue 1209 Makati City Gentlemen : This has reference to your Note No. 101/18 dated August 28, 2018 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting exemption from the payment of value-added (VAT) and ad valorem taxes on the purchase of previously owned and tax-exempt motor vehicle for personal use of AAA , _______________ of the Royal Norwegian Embassy from BBB , _______________ , also of the same Embassy, specifically described as follows: HSAcaE Make Model Year Chassis Number Engine Number Plate Number Mitsubishi Montero SPT 2.5 GLS VGT 4x2 AT 2012 MMBGYKG40CF021245 4D56-UCDJ0371 _______ 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 and ad valorem tax, which are indirect taxes, on their local purchase of goods and services. In other words, purchases by that 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 of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office may confirm VAT and ad valorem tax exemption to the Royal Norwegian Embassy and/or its personnel on their local purchase of motor vehicles since it appears from the list submitted by the DFA dated February 2, 2018, that the Government of Norway allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Norway. Hence, since the transferor and the transferee of the subject motor vehicle are exempt individuals, the sale of one (1) unit of 2012 Mitsubishi Montero SPT 2.5 GLS VGT 4x2 AT by BBB to AAA, for the latter's personal use, continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-191-12 dated May 21, 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, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO OIC-Assistant Commissioner Legal Service