DA ITAD BIR Ruling No. 050-09

April 29, 2009 DA ITAD BIR RULING NO. 050-09 Secs. 106, 108 and 149 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-054-06 Embassy of the People's Republic of China 4896 Pasay Road, Dasmarias Village Makati City Attention: H.E. Liu Jianchao Ambassador Gentlemen : This has reference to your Note No. (09) PG-082 dated 23 March 2009, referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of taxes on the purchase of a locally-assembled motor vehicle, for the personal use of H.E. Liu Jianchao, Ambassador of the Embassy of the People's Republic of China, specifically described as follows: ICESTA Type of Use: Personal Make: Chevrolet Optra 1.6L M/T Model Year: 2006 Color: Sterling Silver Engine Number: F16D3-496645K Chassis Number: KL1NF196E6H100588 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 value-added tax (VAT) and ad valorem tax 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, and ad valorem tax under Section 149, all of the National Internal Revenue Code of 1997, as amended (NIRC of 1997). However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of the People's Republic of China and/or its personnel on their purchase of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of 25 January 2008 that the Government of China allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in China. Hence, the local purchase of one (1) unit of 2006 Chevrolet Optra 1.6L M/T, for the personal use of H.E. Liu Jianchao of the Embassy of the People's Republic of China is exempt from VAT and ad valorem taxes. (BIR Ruling No. DA-ITAD 054-06 dated 11 May 2006) 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service