DA ITAD BIR Ruling No. 087-07

July 27, 2007 DA ITAD BIR RULING NO. 087-07 Sec. 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. ITAD-156-02 Delegation of European Commission in the Philippines 30th Floor, Tower 2, RCBC Plaza 6819 Ayala Avenue 1200, Makati City Attention: Mr. Alistair Macdonald Ambassador and Head of Delegation Gentlemen : This has reference to your Note No. 07/088 dated June 29, 2007 referred to this Office by the Department of Finance and the Department of Foreign Affairs, Office of Protocol, requesting for the exemption from payment value-added tax (VAT) on the local purchase of one (1) unit motor vehicle for the personal use of Mr. Alistair Macdonald, Ambassador and Head of Delegation of the Delegation of the European Commission, specifically described as follows: Make: Honda CRV 4X2 A/T Model Year: 2007 Color: Satellite Silver Engine Number: R20A11800889 Frame Number: MRHRE18307P010631 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which 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 goods or services; "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the 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 value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. TcHCIS However, applying the principle of reciprocity, this Office may grant exemption to Mr. Alistair Macdonald, Ambassador and Head of Delegation, a British national, and whose Embassy in the Philippines is included in the updated list of diplomatic missions entitled to VAT exemption on the purchase of locally-assembled motor vehicles, on the basis of reciprocity, as confirmed by the Office of Protocol of the DFA in its letter dated October 18, 2005 that his Government allows similar exemption to Philippine Embassy personnel on their local purchases of motor vehicles in his country. Hence, the herein request for VAT exemption on the local purchase of one (1) unit of 2007 Honda CRV 4X2 A/T, for the personal use of Mr. Alistair Macdonald, Ambassador and Head of Delegation of the Delegation of the European Commission in the Philippines, is hereby granted. (BIR Ruling No. ITAD-156-02 dated September 10, 2002) 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