DA ITAD BIR Ruling No. 070-06

June 15, 2006 DA ITAD BIR RULING NO. 070-06 Sec 106 & 108, Sec 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-041-06 Embassy of Brunei Darussalam 11th Floor, BPI Building Ayala Ave. Cor. Paseo de Roxas 1226 Makati City Gentlemen : This has reference to your Note Nos. 06-0166 and No. 068/2006 dated January 26, 2006 and May 23, 2006 respectively, referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting exemption from payment of value-added tax (VAT) and ad valorem tax on the purchase of one (1) locally-assembled motor vehicle, for the official use of the Embassy of Brunei Darussalam, specifically described as follows: Make: Toyota Hi-Ace Commuter 2.5 DSL M/T Model Year: 2006 Color: Green Engine Number: 2KD-1350354 Chassis Number: JTFJS02P1-00004946 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/or its diplomatic agents does not include exemption from value-added tax (VAT) and ad valorem tax on its purchases of locally-assembled motor vehicles. In other words, purchases by that Embassy and its diplomatic agents of locally-assembled motor vehicles shall be subject to the value-added tax prescribed under Sections 106 and 108, and ad valorem tax under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of Brunei Darussalam and/or its personnel on their purchases of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005, that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the local purchase of one (1) unit of 2006 Toyota Hi-Ace Commuter 2.5 DSL M/T for the official use of the Embassy of Brunei Darussalam is exempt from ad valorem and value-added taxes. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. TEAcCD Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Services