DA ITAD BIR Ruling No. 062-09

June 3, 2009 DA ITAD BIR RULING NO. 062-09 Secs. 106, 108 and 149 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-67-06 Embassy of Japan 2627 Roxas Boulevard Pasay City Attention: Mr. Haruhiro Jono First Secretary Gentlemen : This has reference to your Note No. 217-09 dated 6 May 2009 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of ad valorem and value-added taxes (VAT) on the purchase of one (1) unit locally assembled motor vehicle for the personal use of Mr. Haruhiro Jono, First Secretary of the Embassy of Japan from Mr. Shinichi Kakui, First Secretary of the same Embassy, specifically described as follows: Make: Toyota Innova G DSL AT 2.5 Model Year: 2006 Color: 199 Quick Silver Frame Number: KUN40-5008812 Engine Number: 2KD-9597147 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 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 tax under Section 149, all 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 Japan 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 25 January 2008 that the Government of Japan allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in Japan. SHAcID Hence, since the transferor and the transferee both of the Embassy of Japan of the subject motor vehicle are both VAT exempt individuals, the sale of one (1) unit 2006 Toyota Innova G DSL AT 2.5 4S by Mr. Shinichi Kakui to Mr. Haruhiro Jono, also a First Secretary of the Embassy of Japan for his personal use is exempt from VAT and ad valorem tax. (BIR Ruling Nos. ITAD 027-03 & 67-06 dated February 3, 2003 & June 8, 2006 respectively) 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