DA ITAD BIR Ruling No. 061-09

June 3, 2009 DA ITAD BIR RULING NO. 061-09 Secs. 106 & 108; Sec. 149 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling Nos. DA-ITAD-152-06 Embassy of the Federal Republic of Nigeria 2211 Paraiso Street Dasmarias Village Makati City Gentlemen : This has reference to your Note No. NE/03/05/2009 dated May 5, 2009, referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of taxes on the local purchase of a motor vehicle for the official use of the Embassy of the Federal Republic of Nigeria, specifically described as follows: Type of Use: Official Make: Toyota Innova G Gas 2.0 A/T Model Year: 2009 Engine Number: 1TR-6714502 Chassis Number: TGN40-5017666 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." (Emphasis supplied) Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT, which is an indirect 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 of the National Internal Revenue Code of 1997, as amended (NIRC of 1997). However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of the Federal Republic of Nigeria and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs dated February 10, 2009 that your Government allows similar exemption to the Philippine Embassy and its personnel on their local purchase of motor vehicles in your country. DAHCaI Hence, the local purchase of one (1) unit of 2009 Toyota Innova G Gas 2.0 A/T for the official use of the Embassy of the Federal Republic of Nigeria is exempt from VAT and ad valorem tax. (BIR Ruling No. DA-ITAD 152-06 dated December 11, 2006) 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