DA ITAD BIR Ruling No. 089-06

August 11, 2006 DA ITAD BIR RULING NO. 089-06 Sec. 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-102-05 Embassy of Japan 2627 Roxas Boulevard Pasay City, Manila Attention: Mr. Akira Sugiyama Minister-Counsellor Gentlemen : This has reference to your Note Verbale No. 304-06 dated July 6, 2006 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 personal use of Mr. Akira Sugiyama, Minister-Counsellor of the Embassy of Japan, specifically described as follows: Type of Use: Personal Make: Toyota Camry 2.4E A/T Model Year: 2006 Chassis Number: ACV30-9002157 Engine Number: 2AZ-2124174 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 goods and services. In other words, purchases by that Embassy and its diplomatic agents of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemption to the Embassy of Japan and its personnel on their local purchases of goods and/or services 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 goods and services in your country. Hence, the local purchase of one (1) unit of 2006 Toyota Camry 2.4E A/T, for the personal use of Mr. Akira Sugiyama of the Embassy of Japan 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 Mr. Akira Sugiyama of the Embassy of Japan 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. DHacTC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service