DA ITAD BIR Ruling No. 088-07

July 25, 2007 DA ITAD BIR RULING NO. 088-07 Sec. 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-102-05 Embassy of the State of Qatar 1378 Caballero St. cor. Lumbang St., Dasmarias Village, Makati City Attention: Hon. Jamal A.J. Al-Shamlan Charge d' Affaires, a.i. Gentlemen : This has reference to your Note Verbale No. QAT/MNL/074/2007 dated July 4, 2007 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a refund of value-added tax (VAT) on the local purchase of a motor vehicle, for the official use of the Embassy of the State of Qatar, specifically described as follows: Type of Use: Official Make: Toyota Hi-Ace GL Grandia 2T Model Year: 2007 Chassis Number: JTFRS13PX00005469 Engine Number: 2KD 1590298 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 the value-added tax (VAT) on its local purchases of locally-assembled motor vehicles. In other words, purchases by that Embassy and its diplomatic agents of locally-assembled motor vehicles shall, in general, be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. CASaEc However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of the State of Qatar and its personnel on their local purchases of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of motor vehicles in your country. Hence, the local purchase of one (1) unit of 2007 Toyota Hi-Ace GL Grandia 2T, for the official use of the Embassy of the State of Qatar, is exempt from VAT. (BIR Ruling No. DA-ITAD-102-05 dated September 19, 2005) This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether the Embassy of the State of Qatar is entitled to VAT exemption on the basis of reciprocity. The determination on whether your request for tax refund should be given due course is upon the Office which will be conducting the investigation for that purpose. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to the proper office for processing and investigation. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service