DA ITAD BIR Ruling No. 054-08

July 15, 2008 DA ITAD BIR RULING NO. 054-08 Secs. 106 & 108 of the National Internal Revenue Code of 1997; Article 34 of the Vienna Convention; BIR Ruling No. DA-ITAD-150-06 Embassy of the United States of America 1201 Roxas Boulevard Manila Attention: Mr. Eric Plues Second Secretary Gentlemen : This has reference to your Note Verbale No. 0709 dated June 2, 2008 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a tax-free purchase of one (1) locally assembled motor vehicle described hereunder for personal use of Mr. Eric Plues, Second Secretary of the Embassy of the United States of America: Type of Use: Personal Make: Hyundai Tucson CWT SU 2WD A/T M-TONE Model Year: 2008 Color: Ebony Black Chassis Number: KMHJM81BP8U889978 Engine Number: G4GC8169949 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 goods or 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 goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. ETHSAI However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the United States of America and/or its personnel on their purchases of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008, that your Government allows similar exemption to Philippine Embassy and its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the herein local purchase of one (1) unit of 2008 Hyundai Tucson CWT SU 2WD A/T M-TONE for the personal use of Mr. Eric Plues, Second Secretary of the Embassy of the United States of America is exempt from VAT. (BIR Ruling No. DA-ITAD-150-06 dated December 8, 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 party is concerned. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service