DA ITAD BIR Ruling No. 048-09

April 27, 2009 DA ITAD BIR RULING NO. 048-09 Secs. 106, 108 & 109 National Internal Revenue Code 1997; Article III, Section 10 Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-001-04 International Labour Organization 19F Yuchengco Tower RCBC Plaza, 6819 Ayala Avenue Makati City Attention: Ms. Linda Wirth Director Gentlemen : This has reference to your Note No. ADMIN/2007-197 dated 19 October 2007 referred to this Office by the Department of Foreign Affairs (DFA), requesting for a refund of value-added tax (VAT) on the local purchase of a motor vehicle, for the official use of the International Labour Organization (ILO), specifically described as follows: TSEcAD Type of Use: Official Make: Nissan Super Safari Patrol 3.0L Turbo Diesel M/T Model Year: 2007 Chassis Number: TWSSLFFY61Y13590 Engine Number: ZD30111050K In reply, please be informed that Section 109 of the National Internal Revenue Code of 1997 (NIRC), as amended by Section 7 of Republic Act No. 9337 dated November 1, 2005, provides as follows: "SEC. 109. Exempt Transactions. Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529 . . .;" In relation, thereto, Section 10, Article III of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated 21 November 1947 provides: "Article III xxx xxx xxx Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax. ScCIaA xxx xxx xxx" Based on the above provisions, important purchases of goods and services in the Philippines for the official use of the specialized agencies of the United Nations (UN) are accorded exemption from indirect taxes such as the VAT imposed under Section 106 & 108 of the NIRC, (BIR Ruling No. DA-ITAD-102-05 dated 19 September 2005). Such being the case, and since the purchase of the vehicle is for the official use of ILO, this Office is of the opinion and so holds that aforementioned purchase of one (1) Nissan Super Safari Patrol 3.0L 4X4 Turbo Diesel M/T is exempt from VAT. It is hereby understood that this exemption applies only to vehicles purchased under the name of ILO for its official use. This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether ILO 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. 50, South Makati, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service