DA ITAD BIR Ruling No. 088-09

September 16, 2009 DA ITAD BIR RULING NO. 088-09 Secs. 106 & 108, NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-040-08 Embassy of the Russian Federation 1245, Acacia Road, Dasmarias Village Makati City, Manila Gentlemen : This has reference to your Note Verbale No. 73 dated June 9, 2009 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 Russian Federation, specifically described as follows: Type of Use: Official Make: Mitsubishi Lancer 2.0 GSR A/T Model Year: 2007 Chassis Number: MMBSRCS9A6F004413 Engine Number: 4G63-AE3077 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 : cTCEIS (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 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 & 108 of the National Internal Revenue Code (NIRC) of 1997, as amended. cHSIDa However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of the Russian Federation and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated 10 February 2009 that the government of the Russian Federation allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in the Russian Federation. Hence, the local purchase of one (1) unit of 2007 Mitsubishi Lancer 2.0 GSR A/T, for the official use of the Embassy of the Russian Federation is exempt from VAT. (BIR Ruling No. DA-ITAD-040-08 dated June 13, 2008) 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 Russian Federation 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 BIR Revenue District Office No. 51 (RDO 51), Pasay City, in accordance with Section (2) (2.1.2) of Revenue Delegation Authority Order No. 03-02. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to RDO 51 for processing and investigation. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service