DA ITAD BIR Ruling No. 078-07

June 13, 2007 DA ITAD BIR RULING NO. 078-07 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. 072-00 Embassy of the Republic of Korea 18/F Pacific Star Building, Makati Avenue Makati City Attention: Mr. Jong-Yong Park KOICA Senior Administrative Officer Gentlemen : This has reference to your Note Verbale No. KPH 2007-144 dated May 16, 2007, referred to this Office by the Department of Finance (DOF) and the Office of Protocol, Department of Foreign Affairs (DFA), requesting for a tax-free purchase on a local motor vehicle for the personal use of Mr. Jong-Yong Park, KOICA Senior Administrative Officer of the Embassy of the Republic of Korea, specifically described as follows: Make: Toyota Vios 1.5G AT Model Year: 2007 Color: 1D4 Thermalyte Engine Number: 1NZ-X534856 Frame Number: MR053HY42 04221000 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 exemptions 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. However, applying the principle of reciprocity, this Office may confirm the exemptions to the Embassy of the Republic of Korea or its personnel on their local purchase of 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 purchases of locally-assembled motor vehicles thereat. Hence, the herein local purchase of one (1) unit of 2007 Toyota Vios 1.5G AT for the personal use of Mr. Jong-Yong Park, KOICA Senior Administrative Officer of the Embassy of the Republic of Korea is exempt from VAT. (BIR Ruling No. ITAD-072-00 dated May 18, 2000) AIDSTE 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