DA ITAD BIR Ruling No. 049-09

April 28, 2009 DA ITAD BIR RULING NO. 049-09 Section 109 (K) of the Tax Code of 1997; Sections 4 & 10, Convention on the Privileges and Immunitiesof the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD 132-02 International Monetary Fund Office of the Resident Representative Rm. 407, 5-Storey Building Bangko Sentral ng Pilipinas A. Mabini St., Manila Attention: Mr. Dennis Botman IMF Resident Representative Gentlemen : This refers to your letters dated April 6, 2009 and April 27, 2009 requesting for value-added tax (VAT) exemption on the local purchase of one (1) unit of motor vehicle for the official use of the International Monetary Fund (IMF), specifically described as follows: Make Model Color Frame Number Engine Year Number Toyota Prado 3.0L 2009 Beige- JTEBY25J80K001184 1KZ1907550 4X4 Diesel A/T Metallic In reply, please be informed that Section 109 (K) of the National Internal Revenue Code of 1997, as amended, (Tax Code of 1997) provides: "Section 109. Exempt Transactions. (1) 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 529 ; xxx xxx xxx" Records show that IMF is a specialized agency of the United Nations (UN). In relation to the above, the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations (UN Convention), provides as follows: " Section 4 The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except in so far as in any particular case they have expressly waived their immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution ." " 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 . " (Underscoring supplied.) Section 10 of the UN Convention clearly requires that to be entitled to a "possible . . . remission or return of the amount of duty or tax", the subject purchase must be for official use of the specialized agency. Such being the case and since the Republic of the Philippines grants the specialized agencies of the United Nations and its related organizations operating in the Philippines exemption from value-added tax on their importations and purchases of important movable and immovable properties for official use, this Office is of the opinion and so holds that IMF is exempt from value-added tax on its purchase of one unit Toyota Prado 3.0L 4X4 Diesel A/T for its official use. (BIR Ruling No. DA-ITAD 132-02 dated August 2, 2002) 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. CITSAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner