DA ITAD BIR Ruling No. 089-07

August 31, 2007 DA ITAD BIR RULING NO. 089-07 Sec. 106 (a) & 149 of the Tax Code 1997; Sec. VII, Article XIII of the Agreement between RP and International Bank for Reconstruction and Development (The World Bank) The World Bank/International Bank for Reconstruction and Development (IBRD) The World Bank 23/F Taipan Place Emerald Avenue, Ortigas Center Pasig City Gentlemen : This refers to your letter dated June 7, 2007, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) and ad valorem tax on the purchase of (1) locally-produced motor vehicle, for the official use of The World Bank/International Bank for Reconstruction and Development, specifically described as follows: Type of Use: Official Make: Toyota Fortuner 4X4 Diesel A/T Model Year: 2007 Color: Lithium Engine Number: 1 KD-7326479 Chassis Number: MR0YZ59G700057061 In reply, please be informed that Section VII, Article XIII of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank) concerning Establishment of a Resident Mission in the Republic of the Philippines provides as follows: cTESIa "VII. OFFICERS, EXPERTS AND CONSULTANTS OF THE BANK Article XII "Officers, experts, persons on secondment and consultants of the Bank assigned to perform service with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: "xxx xxx xxx "(h) except with respect to nationals or permanent residents of the Philippines, the right to import and re-export or sell their furniture and effects, including motor vehicles and spare parts therefore subject to payment of applicable taxes thereon if sold to and enjoying the same privileges and immunities as regards to goods, including motor fuel, purchased in the Philippines to the resident members of diplomatic and international organizations. "xxx xxx xxx "(j) all such other exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations." It is evident that the intention of the foregoing provisions is to place the officers of the World Bank at par with the officers of other international organizations insofar as exemption from taxes is concerned. One such organization is the Asian Development Bank whose officers are granted exemption from value-added tax (VAT) on their local purchase of motor vehicles pursuant to Memorandum of the Executive Secretary to the Secretary of Foreign Affairs and Secretary of Finance dated August 15, 1973 as implemented by Department Order No. 43-89. (BIR Ruling No. ITAD-115-00 dated August 29, 2000) cHITCS Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with the precedent rulings granting VAT to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request for exemption from VAT imposed under Sections 106 (A) and 149 of the Tax Code of 1997 on The World Bank's local purchase of one (1) unit Toyota Fortuner 4X4 Diesel A/T is hereby granted. It is hereby understood that this exemption applies only to vehicles purchased under the name of The World Bank/International Bank for Reconstruction and Development (IBRD). 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