DA ITAD BIR Ruling No. 049-16

December 29, 2016 DA ITAD BIR RULING NO. 049-16 Principle of Reciprocity; BIR Ruling No. ITAD-353-12 Embassy of France 16th Floor Pacific Star Building Cor. Sen. Gil Puyat Extension and Makati Avenue 1200 Attention: AAA _______________ Dear AAA, This refers to your Note No. NV 2015-846142/PRO dated 24 November 2016, referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting exemption from payment of ad valorem and value-added taxes (VAT) on the local purchase of a motor vehicle for the official use of the embassy, specifically described as follows: Type of Use: Official Make and Model: 2016 Peugeot 508 2.0L Color: Nera Black Frame Number: VF38DRHHAFL044441 Engine Number: PSARH0210DYZD4081448 Conduction Sticker: _______ 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. TIADCc However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of France and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated 26 May 2016 that the Government of France allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in France. Hence, the local purchase of one (1) unit of 2016 Peugeot 508 2.0L for the official use of the Embassy of France, is exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD-353-12 dated 05 October 2016) As for the sale made by a VAT-registered business establishment to the qualified foreign embassy, it shall enjoy the benefit of zero percent (0%) VAT, pursuant to Revenue Memorandum Order No. 22-2004. 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.) MARISSA O. CABREROS Assistant Commissioner, Legal Service