DA ITAD BIR Ruling No. 086-14

October 15, 2014 DA ITAD BIR RULING NO. 086-14 Principle of Reciprocity; BIR Ruling No. ITAD-300-11 Australian Embassy Level 23-Tower 2 RCBC Plaza 6819 Ayala Avenue Makati City 1200 Attention: Mr. Widad Zouiten Second Secretary and Consul Gentlemen : This has reference to your Note No. 362/14 dated September 16, 2014 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), on the report of sale of a tax-exempt motor vehicle owned by Ms. Rachael Atley, Third Secretary, as represented by Ms. Larissa Roseanne Jefferson, Second Secretary of the Australian Embassy to Ms. Shasta Fisher, Second Secretary, also of the same Embassy, specifically described as follows: Make Model Chassis Number Engine Number Plate Number Year Honda 2008 MRHRE18308P010661 R20A12800936 27057 CRV 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" 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 of the National Internal Revenue Code of 1997, as amended. EcTaSC However, applying the principle of reciprocity, this Office may confirm exemption of the Australian Embassy and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated July 15, 2014 that the Government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Australia. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2008 Honda CRV by Ms. Rachael Atley, as represented by Ms. Larissa Roseanne Jefferson to Ms. Shasta Fisher, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-300-11 dated December 1, 2011) 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, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service Bureau of Internal Revenue