DA ITAD BIR Ruling No. 058-07

May 9, 2007 DA ITAD BIR RULING NO. 058-07 Article 109 (K), National Internal Revenue Code of 1997, as amended; Article 3, Cooperation Agreement Between the Government of the Republic of the Philippines and the International Organization for Migration; Article 3, Section 10, Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD 191-03 International Organization for Migration 25th Floor, Citibank Tower Condominium 8741 Paseo de Roxas 1226 Makati City Attention: Mr. Bruce Reed Regional Representative and Director of Administration, Manila Gentlemen : This refers to your letter with Ref. No. C.O1.E.036 dated March 21, 2007, endorsed to this Office by the Department of Finance, requesting exemption from the payment of ad valorem and value-added taxes on the local purchase of one (1) motor vehicle, for the official use of the International Organization for Migration (IOM), specifically described as follows: Make: Toyota Innova G Gas 2.0 M/T Model Year: 2006 Color: Xtreme Black Engine Number: 1TR-6345931 Chassis Number: TGN40-5009697 In reply, Section 109 (K) of the National Internal Revenue Code of 1997, as amended by Republic Act No. 9337 , provides: "SEC. 109. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" In connection thereto, Article 3 of the Cooperation Agreement Between the Government of the Republic of the Philippines and the International Organization for Migration dated March 13, 2003, states as follows: "Article 3 1. The Organization shall enjoy in the Republic of the Philippines the same privileges and immunities as those granted to specialized agencies of the United Nations by virtue of the Convention on the privileges and immunities of the specialized agencies of 21 November 1947. 2. In particular, the Organization shall be exempt from all indirect taxes for purchases or articles intended for official use. (Emphasis supplied) xxx xxx xxx" Relevant to the above, Section 10, Article III of the Convention On The Privileges And Immunities Of The Specialized Agencies of the United Nations (UN Convention) provides as follows: "Article III PROPERTY, FUNDS AND ASSETS Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax." IESDCH The aforecited provision of the UN Convention clearly requires that to be entitled to a possible remission or return of the amount of duty or tax, the subject purchase must be for official use of the specialized agency. But in lieu of remission or return of the amount of duty or tax related to the purchase for official use, a tax exemption privilege is instead granted. 1 Such being the case, and since the above purchase of a motor vehicle is for the official use of IOM, this Office is of the opinion and so holds that the herein purchase of one (1) unit 2006 Toyota Innova G 2.0 M/T is exempt from ad valorem and value-added taxes. It is hereby understood that this exemption applies only to vehicles purchased under the name of the International Organization for Migration for its official use. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service Footnotes 1. BIR Ruling No. ITAD-46-07 dated April 11, 2007 citing VAT Ruling No. 143-90 which revoked VAT Ruling No. 176-89.