DA ITAD BIR Ruling No. 082-09

September 2, 2009 DA ITAD BIR RULING NO. 082-09 Sec. 106 of the Tax Code of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-98-03 Embassy of Brunei Darussalam 11th Floor Ayala Wing, BPI Building Ayala Ave. Cor. Paseo de Roxas 1226 Makati City Gentlemen : This has reference to your Note No. 070/2009 dated July 8, 2009 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) on the local purchase of one (1) motor vehicle (imported by local dealership), for the official use of the Embassy of Brunei Darussalam, specifically described as follows: Make: Toyota Fortuner 4X4 3.0 V DSL A/T Model Year: 2009 Color: Xtreme Black Engine Number: 1KD-6312222 Chassis Number: MHFYZ59G104000723 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: ECaHSI (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/or its diplomatic agents does not include exemption from VAT on its local purchase of motor vehicles. In other words, purchases by that Embassy and its diplomatic agents of motor vehicles shall be subject to the VAT prescribed under Section 106 of the National Internal Revenue Code of 1997, as amended (Tax 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 local purchase of motor vehicles it appearing from the list submitted by the DFA as of February 10, 2009, that your Government allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in your country. Hence, the local purchase of one (1) unit of 2009 Toyota Fortuner 4X4 3.0 V DSL A/T for the official use of the Embassy of Brunei Darussalam is exempt from VAT. (BIR Ruling No. DA-ITAD-98-03) This ruling is issued on the basis of the actual 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. ADSTCI Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service