DA ITAD BIR Ruling No. 046-08

June 23, 2008 DA ITAD BIR RULING NO. 046-08 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA ITAD-084-07 Embassy of the State of Qatar 1378 Caballero Street Dasmarias Village Makati City Gentlemen : This has reference to your Note Verbale No. QAT/MNL/063/2008 dated May 9, 2008, referred to this Office by the Department of Finance (DOF) and the Office of Protocol, Department of Foreign Affairs (DFA), requesting for a tax-free purchase of a locally-assembled motor vehicle for the official use of the Embassy of the State of Qatar, specifically described as follows: Make: Ford E-150 Chateau Wagon AT 4.6L Gas Engine Model Year: 2007 Color: Dark Blue/Silver/Medium Flint Engine Number: 7DA60579 Frame Number: 1FMNE11W77DA60579 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 goods or services; caADSE "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value-added tax (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, both of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Embassy of the State of Qatar and/or its personnel on their purchase of locally assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008 that the Government of Qatar allows similar exemption to Philippine Embassy and/or its personnel on their purchases of locally-assembled motor vehicles thereat. CaEATI Hence, the herein local purchase of one (1) unit of 2007 Ford E-150 Chateau Wagon AT 4.6L Gas Engine for the official use of the Embassy of the State of Qatar is exempt from VAT. (BIR Ruling No. DA-ITAD-084-07 dated July 17, 2007) This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether the Embassy of the State of Qatar is entitled to VAT exemption on the basis of reciprocity. The determination on whether your request for tax refund should be given due course is upon BIR Revenue District Office (RDO) No. 51, Pasay City, in accordance with Section (2) (2.1.2) of Revenue Delegation Authority Order No. 03-02. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to RDO 51 for processing and investigation. cIHDaE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service