DA ITAD BIR Ruling No. 082-10

September 29, 2010 DA ITAD BIR RULING NO. 082-10 Secs. 106 and 108, NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-053-00 Embassy of the Argentine Republic 8th Floor, Liberty Center Building 104 H.V. de la Costa Street Salcedo Village, Makati City Attention: H.E. Joaquin Daniel Otero Ambassador, Extraordinary and Plenipotentiary Gentlemen : This has reference to your Note No. DAE/53/2010 dated August 23, 2010 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) on the purchase of a second-hand, previously tax-exempted motor vehicle for the personal use of H.E. Joaquin Daniel Otero, Ambassador Extraordinary and Plenipotentiary of the Embassy of the Argentine Republic from Mr. Jiro Okuyama, Minister of the Embassy of Japan, specifically described as follows: CHcETA Make: Toyota Innova G Gas 2.0 4S A/T Model Year: 2008 Color: Thermalyte Engine Number: 1TR-6573277 Frame Number: TGN40-5014759 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 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, which is an indirect tax, 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 of the National Internal Revenue Code of 1997 (NIRC of 1997) as amended. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the Argentine Republic and/or its personnel on their purchase of motor vehicles it appearing from the list submitted by the DFA dated March 22, 2010 that the Government of Argentina allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Argentina. cTDECH Hence, since the transferor and the transferee of the subject motor vehicle are VAT exempt individuals, the sale of one (1) unit 2008 Toyota Innova G Gas 2.0 4S A/T by Mr. Jiro Okuyama to H.E. Joaquin Daniel Otero, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. DA-ITAD-101-09 dated 20 November 2009) As for the sale made by a VAT-registered business establishment to the qualified foreign embassy, it shall enjoy the benefit of zero percent (0%) VAT pursuant to Revenue Memorandum Order No. 22-2004. 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.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service