DA ITAD BIR Ruling No. 067-08

October 2, 2008 DA ITAD BIR RULING NO. 067-08 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. 068-05 Embassy of the State of Kuwait 1230 Acacia Road Dasmarias Village Makati City Gentlemen : This has reference to your Note Verbale No. EKM 08-350 dated July 11, 2008, referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits of the Department of Foreign Affairs (DFA), requesting for a tax-free purchase of a locally-assembled motor vehicle for the official use of the Embassy of the State of Kuwait, specifically described as follows: AcSHCD Make: Chrysler Town and Country Model Year: 2008 Color: Brilliant Black Engine Number: 8B111223 VIN Number: 1A8GSH4P488111223 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, the 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 of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Embassy of the State of Kuwait 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 January 25, 2008, that the Government of the State of Kuwait allows similar exemption to Philippine Embassy and/or its personnel on their purchases of locally-assembled motor vehicles thereat. IDCHTE Hence, the herein local purchase of one (1) unit of 2008 Chrysler Town and Country for the official use of the Embassy of the State of Kuwait is exempt from VAT. (BIR Ruling No. DA-ITAD-068-05 dated July 4, 2005) 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