DA ITAD BIR Ruling No. 048-07

April 13, 2007 DA ITAD BIR RULING NO. 048-07 Sec. 106 &108, Sec. 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-19-04 Embassy of Australia 23RD Floor Yuchengco Tower RCBC Plaza 6819 Ayala Ave. cor. Sen. Gil. Puyat Ave. Makati City Attention: Mr. Andrew Xavier Cumpston First Secretary Gentlemen : This has reference to your Note Verbale No. 134/07 and File No. MN94/00109 dated March 16, 2007, referred to this Office by the Department of Finance (DOF) and the Office of Protocol, Department of Foreign Affairs (DFA), requesting for the exemption from payment of ad valorem and value-added taxes (VAT) on the local purchase on one (1) unit motor vehicle for the personal use of Mr. Andrew Xavier Cumpston, First Secretary of the Embassy of Australia, specifically described as follows: Make: Honda Civic 1.8S A/T Model Year: 2007 Color: Night Hawk Black Conduction No.: DE 1386 Frame Number: PADFD16407V102978 Engine Number: RNGD64-7103009 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; "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemptions from 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, in general, be subject to the value-added tax 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 confirm the exemptions to the Embassy of Australia or its personnel on their local purchase of motor vehicles 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/or its personnel on their purchases of locally-assembled motor vehicles thereat. THcEaS Hence, the herein local purchase of one (1) unit of 2007 Honda Civic 1.8S A/T for the personal use of Mr. Andrew Xavier Cumpston, First Secretary of the Embassy of Australia is exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-19-04 dated February 23, 2004) 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