DA ITAD BIR Ruling No. 053-09

May 8, 2009 DA ITAD BIR RULING NO. 053-09 Secs. 106 & 108 of the NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-102-05 Embassy of Japan 2627 Roxas Boulevard, Pasay City 1300, Metro Manila Gentlemen : This has reference to your Note Verbale No. 68-08 dated March 23, 2009 referred to this Office by the Department of Foreign Affairs (DFA), requesting for a refund of value-added tax (VAT) on the local purchase of a motor vehicle, for the official use of the Embassy of Japan, specifically described as follows: Type of Use: Official Make: Nissan Urvan 2.7Lazda 3 R2.0L Model Year: 2008 Chassis Number: TVP4LEFE24A35456 Engine Number: TD27-839018 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 the value-added tax (VAT) on its local purchases of locally-assembled motor vehicles. In other words, purchases by that Embassy and its diplomatic agents of locally-assembled motor vehicles shall, in general, be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. cHDaEI However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of Japan 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 10 February 2009 that the Government of Japan allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in Japan. Hence, the local purchase of one (1) unit of 2008 Nissan Urvan 2.7L, for the official use of the Embassy of Japan, is exempt from VAT. (BIR Ruling No. DA-ITAD-102-05 dated 19 September 2005) This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether ILO is entitled to VAT exemption on the basis of reciprocity. The determination on whether your request for tax refund should be given due course is upon BIR Revenue District Office (RDO) No. 51, Pasay City, in accordance with Section (2) (2.1.2) of Revenue Delegation Authority Order No. 03-02. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to RDO 51 for processing and investigation. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service