DA ITAD BIR Ruling No. 056-15

November 24, 2015 DA ITAD BIR RULING NO. 056-15 Principle of Reciprocity; BIR Ruling No. ITAD-301-11 Embassy of Canada Levels 6-8, Tower 2, RCBC Plaza Bldg. Ayala Avenue, Makati City Attention: Mr. Bryan Marc Rappaport First Secretary Gentlemen : This has reference to your Note No. 15-222 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 one (1) unit previously-owned and tax-exempted motor vehicle for personal use of Mr. Bryan Marc Rappaport, First Secretary of the Embassy of Canada from Mr. Edward Lewis Robinson III , Second Secretary of the Embassy of the United States of America specifically described as follows: Make Model Chassis Number Engine Number Plate Number Toyota Fortuner 2013 MHFYZ59G504004533 1KD-U267043 OEV-30090 4x4 V DSL 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. CAIHTE However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Canada and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated October 20, 2015 that the Government of Canada allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in Canada. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2013 Toyota Fortuner 4x4 V DSL A/T by Mr. Edward Lewis Robinson III to Mr. Bryan Marc Rappaport, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-301-11 dated December 1, 2011) . aScITE 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, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant CommissionerLegal Service