DA ITAD BIR Ruling No. 081-09

September 2, 2009 DA ITAD BIR RULING NO. 081-09 Secs. 106 & 108 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-67-06 Embassy of Australia 23rd Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil Puyat Ave., Makati City Attention: Mr. Paul Philip Hunter Stewart First Secretary Gentlemen : This has reference to your Note No. 238/09 and File No. MN94/00109 dated 26 June 2009 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for tax exemption on the purchase of a previously tax-exempt, second hand motor vehicle for the personal use of Mr. Paul Philip Hunter Stewart, First Secretary of the Embassy of Australia from Mr. Justin Wade Reuben Sibley, First Secretary of the same Embassy, specifically described as follows: Make: Ford Escape XLT Model Year: 2006 Color: Black Frame Number: PE2ET68171WE00583 Engine Number: AJ013154 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: cTCEIS (a) indirect taxes of a kind which are normally incorporated in the price of the goods and services; . . . xxx xxx xxx." (Emphasis supplied) Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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. (NIRC of 1997) However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Embassy of Australia and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs dated 10 February 2009 that the Government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their local purchases of motor vehicles thereat. Hence, since the transferor and the transferee of the subject motor vehicle are both VAT exempt persons, the sale of one (1) unit 2006 Ford Escape XLT for the personal use of Mr. Paul Philip Hunter Stewart, First Secretary of the Embassy of Australia, continues to be tax-exempt. (BIR Ruling No. ITAD 67-06 dated 8 June 2006) AaHTIE 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