DA ITAD BIR Ruling No. 057-14

June 23, 2014 DA ITAD BIR RULING NO. 057-14 Principle of Reciprocity; BIR Ruling No. ITAD-300-11 Australian Embassy Level 23-Tower 2 RCBC Plaza 6819 Ayala Avenue Makati City 1200 Attention: Mr. Graeme Tinney Counsellor and Consul General Gentlemen : This has reference to your Note No. 185/14 dated May 27, 2014 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), on the report of sale of a tax-exempt motor vehicle owned by the Australian Embassy , represented by Mr. Graeme Tinney, Counsellor and Consul General to Mr. Timothy John Lopsick , Assistant Defence Attach, also of the Australian Embassy, specifically described as follows: Make Model Chassis Number Engine Number Plate Number Year Toyota 2008 MHFZX69G607011490 2TR-6650345 DC 1853 Fortuner 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. HSaEAD However, applying the principle of reciprocity, this Office may confirm exemption of the Australian Embassy and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated July 23, 2013 that the Government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Australia. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt entity/individual, the sale of one (1) unit 2008 Toyota Fortuner by the Australian Embassy to Mr. Timothy John Lopsick, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-300-11 dated December 1, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service