DA ITAD BIR Ruling No. 059-14

June 23, 2014 DA ITAD BIR RULING NO. 059-14 Principle of Reciprocity; BIR Ruling No. ITAD-293-11 Embassy of the Federal Republic of Germany 25/F Tower 2, RCBC Plaza 6819 Ayala Avenue (cnr Sen. Gil Puyat Avenue) 1261 Makati City Attention: Mr. Klaus Heidorn Head of Administration Gentlemen : This has reference to your KFZ Note No. 32/2014 dated May 12, 2014 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added tax (VAT) on the purchase of a previously-owned and tax-exempted motor vehicle for personal use of Dr. Suresh Kumar Manickom , First Secretary of the Embassy of the Republic of India from H.E. Joachim Heidorn , Ambassador Extraordinary and Plenipotentiary of the Embassy of the Federal Republic of Germany, specifically described as follows: Make Model Color Chassis Number Engine Number Plate Number Mitsubishi 2008 Beige JMYLRV93W8J736406 6G72TP9714 DC-2557 Pajero 3.0 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. EDcICT However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the Federal Republic of Germany 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 the Federal Republic of Germany allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in Germany. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2008 Mitsubishi Pajero 3.0 by H.E. Joachim Heidorn to Dr. Suresh Kumar Manickom , for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-293-11 dated November 23, 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