DA ITAD BIR Ruling No. 060-08

August 13, 2008 DA ITAD BIR RULING NO. 060-08 Sec. 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-46-05 Embassy of Australia Level 23, Tower 2, RCBC Plaza 6819 Ayala Ave. cor. Sen. Gil Puyat Ave. Makati City Attention: Mr. Timothy Kevin Browne Second Secretary Gentlemen : This has reference to your Note Verbale No. 159/08 dated April 8, 2008, referred to this Office by the Department of Finance (DOF) and the Office of Protocol & State Visits, Department of Foreign Affairs (DFA), requesting for a tax-free purchase on a locally-assembled motor vehicle for the personal use of Mr. Timothy Kevin Browne, Second Secretary of the Embassy of Australia, specifically described as follows: ACIDSc Make: Ford Everest 4x2 A/T 2.5L Dura Torq TDCi Model Year: 2008 Color: Highlight Silver Engine Number: WLAT 931567 Frame Number: MNCLS4D108W210086 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 exemption from the value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by an Embassy and/or diplomatic personnel of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm the value-added tax exemption of the Embassy of Australia and/or its personnel on their purchase of locally-assembled motor vehicles, it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008 that the Government of Australia allows similar tax exemption to the 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 2008 Ford Everest 4x2 A/T 2.5L Torq TDCi for the personal use of Mr. Timothy Kevin Browne, Second Secretary of the Embassy of Australia is exempt from VAT. (BIR Ruling No. DA-ITAD-46-05 dated May 25, 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. CaSHAc Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service