DA ITAD BIR Ruling No. 063-09

June 3, 2009 DA ITAD BIR RULING NO. 063-09 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 & 133-06 Embassy of Australia 23rd Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil Puyat Ave., Makati City Attention: Mr. Andrew David Egan Counsellor Gentlemen : This has reference to your Note No. 143/09 and File No. MN94/00109 dated 1 April 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. Andrew David Egan, Counsellor of the Embassy of Australia from Mr. Paul Sam Zappia, Counsellor of the same Embassy, specifically described as follows: Make : Toyota Innova G Gas 2.0 A/T Model Year : 2006 Color : Light Green Mica Metallic Frame Number : TGN40-5007982 Engine Number : 1TR-6287620 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 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 25 January 2008 that the Government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in Australia. TCDcSE Hence, since the transferor (Mr. Paul Sam Zappia) and the transferee (Mr. Andrew Egan) of the subject motor vehicle are both VAT exempt individuals, the sale of one (1) unit 2006 Toyota Innova G Gas 2.0 A/T for the personal use of Mr. Andrew David Egan, Counsellor of the Embassy of Australia is exempt from VAT and ad valorem tax. (BIR Rulings Nos. ITAD 67-06 & 133-06 dated June 8, 2006 and October 30, 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. ISCaTE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service