DA ITAD BIR Ruling No. 053-15

November 5, 2015 DA ITAD BIR RULING NO. 053-15 Principle of Reciprocity; BIR Ruling No. ITAD-290-11 Delegation of the European Union to the Philippines 30th Floor, Tower II, RCBC Plaza, 6819 Ayala Avenue Makati City, 1200, Philippines Attention: Mr. Jose Maria Romero Pruche Attach, Head of Administration Gentlemen : This has reference to your Note No. 147/2015 dated September 21, 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 purchase of a previously-owned and tax-exempted motor vehicle for personal use of Mr. Axel Mattias Lentz (Swedish National) , Minister Counsellor of the Delegation of the European Union from Mr. Lubomir Frebort (Czech National) , Counsellor, also of the Delegation of the European Union, specifically described as follows: Make Model Color Chassis Number Engine Number Hyundai Tucson 2011 Silky Bronze KMHJT81BBBU365493 G4KDBU481083 Theta 2.0L GL 2WD A/T 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. However, applying the principle of reciprocity, this Office may confirm exemption of the personnel of the Delegation of the European Union on his/her local purchase of motor vehicles it appearing from the list submitted by the DFA dated October 7, 2015 that the Government of the country of which the personnel is a national allows similar exemption to the Philippine Embassy and/or its personnel on his/her local purchase of motor vehicles in said country. Hence, considering that the Government of Norway, which has jurisdiction over Sweden is included in the October 7, 2015 DFA list, the transferee of the subject motor vehicle who is a Swedish diplomat is confirmed to be exempt from VAT. Accordingly, since both the transferor and the transferee are VAT exempt individuals, the sale of one (1) unit 2011 Hyundai Tucson Theta 2.0L GL 2WD A/T by Mr. Lubomir Frebort to Mr. Axel Mattias Lentz , for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-290-11 dated November 23, 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. aDSIHc Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service