Embassy of Switzerland

September 24, 2018 DA ITAD BIR RULING NO. 045-18 Principle of Reciprocity; BIR Ruling No. ITAD-321-11 Embassy of Switzerland 24th Floor, Equitable Bank Tower 8751 Paseo de Roxas P.O. Box 2068, MCPO 1260 Makati City Gentlemen : This has reference to your Note No. 71/2018 dated August 29, 2018 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added (VAT) and ad valorem taxes on the purchase of a previously owned and tax-exempt motor vehicle for personal use of AAA , _______________ of the Embassy of Switzerland from BBB , _______________ , also of the same Embassy, specifically described as follows: HESIcT Make Model Color Chassis Number Engine Number Plate Number Toyota Innova 2.5 E Dsl A/T 2014 Thermalyte KUN405100582 2KDU406304 _______ 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 Embassy Switzerland 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 Switzerland allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Switzerland. Hence, since the transferor and the transferee of the subject motor vehicle are exempt individuals, the sale of one (1) unit of 2014 Toyota Innova 2.5 E Dsl A/T by BBB to AAA, for the latter's personal use, continues to be exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-321-11 dated December 19, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO OIC-Assistant Commissioner Legal Service