DA ITAD BIR Ruling No. 068-09

June 25, 2009 DA ITAD BIR RULING NO. 068-09 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-81-07 Delegation of the European Commission to the Philippines 30th Floor, Tower 2, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Attention: Mr. Benedikt Madl Attach Gentlemen : This has reference to your Note No. 09/082 dated May 18, 2009 referred to this Office by the Department of Finance and the Department of Foreign Affairs, Office of Protocol, requesting for the exemption from payment value-added tax (VAT) on the local purchase of one (1) unit motor vehicle for the personal use of Mr. Benedikt Madl, Attach of the Delegation of the European Commission, specifically described as follows: TADIHE Make: Honda Jazz 1.3L S M/T Model Year: 2009 Color: Cerulean Blue Engine Number: L13Z11706295 Frame Number: MRHGE67309P020277 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which 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 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 value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemption to Mr. Benedikt Madl, Attach, a Belgian national, and whose Embassy in the Philippines is included in the updated list of diplomatic missions entitled to VAT exemption on the purchase of locally-assembled motor vehicles, on the basis of reciprocity, as confirmed by the Office of Protocol and State Visits of the DFA in its letter dated February 10, 2009 that his Government allows similar exemption to Philippine Embassy personnel on their local purchases of motor vehicles in his country. Hence, the herein request for VAT exemption on the local purchase of one (1) unit of 2009 Honda Jazz 1.3L S M/T, for the personal use of Mr. Benedikt Madl, Attach of the Delegation of the European Commission in the Philippines, is hereby granted. (BIR Ruling No. ITAD-81-07 dated July 5, 2007) HcTSDa 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