DA ITAD BIR Ruling No. 061-15

December 23, 2015 DA ITAD BIR RULING NO. 061-15 Principle of Reciprocity; BIR Ruling No. ITAD-353-12 Embassy of France 6th Floor, Pacific Star Building Corner Gil Puyat and Makati Avenues 1200 Makati City Gentlemen : This has reference to your Note No. NV 2015-1028370/PRO dated November 12, 2015 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from the payment of value-added tax (VAT) on the local purchase of a motor vehicle for the official use of the Embassy of France, specifically described as follows: Type of Use : Official Make : Toyota Fortuner 4x2 2.7L Gas A/T Model Year : 2016 Color : 1D6 Silver Metallic Frame Number : MHFZX69G907080724 Engine Number : 2TR8856026 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. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of France and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated November 13, 2015 that the Government of France allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in France. In view thereof, the local sale of one (1) unit of 2016 Toyota Fortuner 4x2 2.7L Gas A/T for the official use of the Embassy of France, being an entity exempt from VAT, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (c) of the NIRC of 1997 as amended. (BIR Ruling No. ITAD-353-12 dated October 5, 2012) TCAScE 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