DA ITAD BIR Ruling No. 045-06

April 26, 2006 DA ITAD BIR RULING NO. 045-06 Sec 106 & 108, Sec 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; 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. Pablo Chiho Kang Deputy Head Mission Gentlemen : This has reference to your Note No. 100/06 and File No. MN94/00109 dated March 21, 2006 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), 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. Pablo Chiho Kang, Deputy Head Mission of the Embassy of Australia in the Philippines specifically described as follows: Make: Honda CRV 2.0 A/T 2WD 8 seater Model Year: 2006 Color: Nighthawk Black Frame Number: PADRD48706V401734 Engine Number: PNKD77-6401705 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: TDCaSE "(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 be subject to the VAT 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 and its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) unit of 2006 Honda CRV 2.0 A/T 2WD 8 seater for the personal use of Mr. Pablo Chiho Kang, Deputy Head of Mission of the Embassy of Australia is exempt from VAT and ad valorem taxes. (BIR Ruling No. ITAD-19-04 dated February 23, 2004) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service