DA ITAD BIR Ruling No. 080-09

August 25, 2009 DA ITAD BIR RULING NO. 080-09 Section 109 of the National Internal Revenue Code of 1997; Section 10, Article III, Vienna Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-1-04 United Nations Population Fund (UNFPA) 30th Floor, Yuchengco Tower RCBC Plaza, 6819 Ayala Avenue Makati City Gentlemen : This refers to your letter dated June 19, 2009, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) on the purchase of a motor vehicle, for the official use of the United Nations Population Fund (UNFPA), specifically described as follows: Make: One (1) Honda Accord 2.4S AT Model Year: 2008 Color: Bold Beige Engine Number: K24Z21958068 Chassis Number: MRHCP26208P020457 In reply, please be informed that Section 109 of the National Internal Revenue Code of 1997 (NIRC of 1997) as amended by Republic Act No. 9337, provides, viz. : HDIaST "SEC. 109. Exempt Transactions. Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" In relation thereto, Section 10, Article III of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated November 21, 1947 provides: "Article III xxx xxx xxx Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax. DcITaC xxx xxx xxx" (Emphasis supplied) Based on the above provisions, purchases of goods or properties in the Philippines for the official use of the specialized agencies of the United Nations (UN) are accorded exemption from indirect taxes such as the VAT imposed under Section 109 of the NIRC of 1997, as amended. Such being the case, and since UNFPA is a specialized agency of the UN, this Office is of the opinion and so holds that aforementioned purchase of one (1) unit 2008 Honda Accord 2.4v, is exempt from VAT (BIR Ruling No. DA-ITAD-1-04 dated January 12, 2004). It is hereby understood that this exemption applies only to vehicles purchased under the name of UNFPA for its official use. 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. SAHEIc Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner