DA ITAD BIR Ruling No. 064-08

September 8, 2008 DA ITAD BIR RULING NO. 064-08 Sec. 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-051-03 Royal Embassy of Saudi Arabia 128 H.V. de la Costa cor. Sanchez Sts. Salcedo Village, Makati City Gentlemen : This has reference to your Note No. DFA/1429H/098 dated July 23, 2008 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting the amendment of BIR Ruling No. DA-ITAD-43-08 dated 20 July 2008, confirming exemption from value-added tax (VAT) on the local purchase of one (1) motor vehicle, for the official use of the Royal Embassy of Saudi Arabia, specifically described as: CaDEAT Make: Toyota Camry 2.4V A/T Model Year: 2008 Color: Xtreme Black Chassis Number: MR053BK4007024173 Engine Number: 2AZE091129 The amendment is requested to replace the foregoing specification of the subject vehicle to: Make: Toyota Camry 3.5V A/T Model Year: 2008 Color: Xtreme Black Chassis Number: MR053KK4007002069 Engine Number: 2GR0442086 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, 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 that Embassy and its diplomatic agents of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. aHICDc However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Royal Embassy of Saudi Arabia and/or its personnel on their local 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 the Royal Embassy of Saudi Arabia allows a similar exemption to Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles thereat. Hence, the local purchase of one (1) unit of 2008 Toyota Camry 3.5V A/T, engine number 2GR0442086 and with chassis number MR053KK4007002069 for the official use of the Royal Embassy of Saudi Arabia is exempt from VAT. (BIR Ruling No. ITAD-051-03 dated April 8, 2003) aScITE This ruling CANCELS and SUPERSEDES BIR Ruling No. DA-ITAD 43-08 dated 20 July 2008 . 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