DA ITAD BIR Ruling No. 045-08

June 20, 2008 DA ITAD BIR RULING NO. 045-08 Sec. 106 (a) of the Tax Code 1997; Sec. VII, Article XIII of the Agreement between RP and International Bank for Reconstruction and Development (The World Bank); BIR Ruling No. DA-142-07 The World Bank 23/F The Taipan Place F. Ortigas Jr. Road, Ortigas Center Pasig City Attention: Mr. Bert Hofman Country Director Gentlemen : This refers to your letter dated April 18, 2008, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for exemption from the payment of value-added tax (VAT) and ad valorem tax on the local purchase of one (1) motor vehicle, for the personal use of Mr. Bert Hofman, Country Director of The World Bank, specifically described as follows: Type of Use: Personal Make: Toyota Innova V Gas 2.0 A/T Model Year: 2008 Color: Medium Silver Metallic Engine Number: 1TR-6516625 Chassis Number: TGN40-5013778 In reply, please be informed that Section VII, Article XIII of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank) concerning Establishment of a Resident Mission in the Republic of the Philippines provides as follows: "VII. OFFICERS, EXPERTS AND CONSULTANTS OF THE BANK Article XIII Officers, experts, persons on secondment and consultants of the Bank assigned to perform service with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: AHCcET xxx xxx xxx (h) except with respect to nationals or permanent residents of the Philippines, the right to import and re-export or sell their furniture and effects, including motor vehicles and spare parts therefore subject to payment of applicable taxes thereon if sold to and enjoying the same privileges and immunities as regards to goods, including motor fuel, purchased in the Philippines to the resident members of diplomatic and international organizations. xxx xxx xxx (j) all such other exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations." It is evident that the intention of the foregoing provisions is to place the officers of the World Bank at par with the officers of other international organizations insofar as exemption from taxes is concerned. One such organization is the Asian Development Bank whose officers are granted exemption from value-added tax (VAT) on their local purchase of motor vehicles pursuant to Memorandum of the Executive Secretary to the Secretary of Foreign Affairs and Secretary of Finance dated August 15, 1973 as implemented by Department Order No. 43-89. Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with the precedent rulings granting VAT to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request for exemption from VAT and ad valorem taxes imposed under Sections 106 (A) and 149 of the Tax Code of 1997 on the herein local purchase of one (1) unit Toyota Innova V Gas 2.0L A/T, for the personal use of Mr. Bert Hofman, Country Director of The World Bank, is hereby granted. 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service