DA ITAD BIR Ruling No. 059-07

May 9, 2007 DA ITAD BIR RULING NO. 059-07 Sec. 106, 108 & 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-64-05 Embassy of Australia Level 23, Tower 2, RCBC Plaza 6819 Ayala Ave. cor. Sen. Gil Puyat Ave. Makati City Attention: Mr. Nicholas Garry Wong Third Secretary Gentlemen : This has reference to your Note Verbale No. 078/07 dated February 9, 2007, referred to this Office by the Department of Finance (DOF) and the Office of Protocol, Department of Foreign Affairs (DFA), requesting for a tax-free purchase of a local motor vehicle for the personal use of Mr. Nicholas Garry Wong, Third Secretary of the Embassy of Australia, specifically described as follows: Make: Ford Escape XLT 2.3L 4X4 A/T Model Year: 2007 Color: Platinum Conduction No.: JB6539 Engine Number: L3164609 VIN Number: PE23V66171GG00036 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 exemptions from the value-added tax (VAT) and ad valorem tax 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, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. IDEScC However, applying the principle of reciprocity, this Office may confirm the exemptions to the Embassy of Australia or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005 that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchases of locally-assembled motor vehicles thereat. Hence, the herein local purchase of one (1) unit of 2007 Ford Escape XLT 2.31, 4X4 A/T for the personal use of Mr. Nicholas Garry Wong, Third Secretary of the Embassy of Australia is exempt from VAT and ad valorem tax. (BIR Ruling No. DA-ITAD-64-05 dated June 28, 2005) 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service