Embassy of Japan

December 14, 2023 DA ITAD BIR RULING NO. 050-23 Principle of Reciprocity; BIR Ruling No. ITAD-313-11 Embassy of Japan 2627 Roxas Boulevard 1300 Pasay City Gentlemen : This refers to your Note No. 603-23 dated October 24, 2023 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 local purchase of a motor vehicle for the personal use of Mr. Ichimiya Yoshifumi, First Secretary of the Embassy of Japan, specifically described as follows: MAKE YEAR COLOR FRAME NUMBER ENGINE NUMBER Toyota Innova 2.8 E AT 2023 Black 1 PA2JA8EM2P0130125 1GD1441625 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 hereby confirms the VAT and ad valorem tax exemption of the Embassy of Japan and/or its personnel on their local purchase of motor vehicles since it appears from the DFA VAT Matrix dated April 5, 2023 that the Government of Japan allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Japan. In view thereof, the local sale of one (1) unit of 2023 Toyota Innova 2.8 E AT, for the personal use of Mr. Ichimiya Yoshifumi, First Secretary of the Embassy of Japan, 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