Embassy of the United States of America

October 12, 2022 DA ITAD BIR RULING NO. 048-22 Principle of Reciprocity; BIR Ruling No. ITAD-053-14 Embassy of the United States of America 1201 Roxas Boulevard 1000 Manila, Philippines Gentlemen : This has reference to your Note No. 1836 dated 30 September, 2022, referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem tax on the motor vehicles locally purchased by the Embassy of the United States of America, specifically described as follows: MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Honda ADV 150 2022 Matte Brown MH1KF397XMK057545 KF39E7057575 Honda ADV 150 2022 Matte Brown MH1KF3979MK057567 KF39E7057610 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations states that 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, thus: "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" In other words, purchases by the 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 (NIRC) of 1997, as amended, respectively. However, applying the principle of reciprocity, this Office may confirm VAT and ad valorem tax exemption to the Embassy of the United States of America and/or its personnel on their local purchase of motor vehicles since it appears from the DFA VAT Matrix dated September 5, 2022 that the Government of the United States of America allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in the United States. In view thereof, the local sales of two (2) units of 2022 Honda ADV 150, for the official use of the Embassy of the United States of America, being an exempt entity, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (b) of the NIRC of 1997, as amended. Such sale is likewise exempt from ad valorem tax pursuant to Section 9 of Revenue Regulations No. 25-2003. This ruling is issued on the basis of the facts as represented. However, if it will be disclosed upon investigation 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 Assistant Commissioner Legal Service