DA ITAD BIR Ruling No. 049-15

October 20, 2015 DA ITAD BIR RULING NO. 049-15 Principle of Reciprocity; BIR Ruling No. ITAD-303-11 Embassy of Italy 6/F Zeta II Bldg. 191 Salcedo Street Legaspi Village, Makati City Attention: H.E. Massimo Roscigno Ambassador Extraordinary and Plenipotentiary Gentlemen : This has reference to your Note No. 1369 dated September 10, 2015 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from the payment of value-added tax (VAT) on the local purchase of a motor vehicle for personal use of Ms. Stefania De Angelis , Administrative and Technical Staff of the Embassy of Italy, specifically described as follows: Type of Use : Personal Make : Toyota Avanza 1.3J M/T Model Year : 2015 Color : Gray Frame Number : MHKM1BE1FBK005754 Engine Number : K3-MG39969 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 the goods and services; xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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 of the National Internal Revenue Code of 1997, as amended. aDSIHc However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Italy and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated September 15, 2015 that the Government of Italy allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Italy. In view thereof, the local purchase of one (1) unit of 2015 Toyota Avanza 1.3J M/T for personal use Ms. Stefania De Angelis, Administrative and Technical Staff of the Embassy of Italy, being an individual exempt from VAT, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (c) of the NIRC of 1997 as amended. (BIR Ruling No. ITAD-303-11 dated December 1, 2011) 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, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service