DA ITAD BIR Ruling No. 090-06

August 14, 2006 DA ITAD BIR RULING NO. 090-06 Secs 106 & 109 of the National Internal Revenue Code of 1997; Article VI, Articles of Agreement of the International Finance Corporation ITAD Ruling No. 164-03 International Finance Corporation 11th Floor, Tower One Ayala Triangle, Ayala Avenue Makati City, 1226 Attention: Mr. Vipul Bhagat Chief of Mission & Country Manager Philippines & Thailand, International Finance Corporation Gentlemen : This has reference to your letter dated March 2, 2006, indorsed to this Office by the Department of Finance (DOF) and with favorable recommendation from 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 (2) locally-produced motor vehicles, for the official use of the International Finance Corporation-Technical Assistance Facility, PEP-Philippines in Manila and Davao, specifically described as follows: Manila Davao Type of Use: Official Use Type of Use: Official Use Organization: International Finance Corporation Organization: International Finance Corporation Make: Toyota Innova G AT 2.0 Make: Toyota Innova G AT 2.0 Model: 2006 Model: 2006 Color: Night Mist Color: Night Mist Engine No.: ITR-6205382 Engine No.: ITR-6207571 Frame No.: TGN40-5005736 Frame No.: TGN40-5005738 It is represented that the International Finance Corporation (IFC) is a member of the World Bank Group; that it is a fully accredited diplomatic organization with the Department of Foreign Affairs; and that it is immune from taxation in accordance with Section 9(a), Article VI of the Articles of Agreement of the International Finance Corporation. In reply, please be informed of Section 109 of the National Internal Revenue Code of 1997 (NIRC), as amended by Section 7 of Republic Act No. 9337 dated November 1, 2005, which provides, as follows: "SEC. 109. Exempt Transactions. Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" Relative thereto, Section 9 (a), Article VI of the Articles of Agreement of the International Finance Corporation provides that: "Article VI Status, Immunities and Privileges xxx xxx xxx Section 9. Immunities from Taxation (a) The Corporation, its assets, property, income and its operations and transactions authorized by this Agreement, shall be immune from all taxation and from all customs duties. The Corporation shall also be immune from liability for the collection or payment of any tax or duty."(Emphasis supplied) In view of all the foregoing, the IFC shall be exempt from all taxes, including VAT. Hence, this Office is of the opinion and so holds that the local purchases of two (2) units of 2006 Toyota Innova G AT 2.0 for the official use of the International Finance Corporation - Technical Assistance Facility, PEP-Philippines in Manila and in Davao are exempt from VAT imposed under Section 106(A) of the NIRC, as amended by Section 4, Republic Act No. 9337. (ITAD Ruling No. 164-03 dated November 7, 2003) It is hereby understood that this exemption applies only to vehicles purchased under the name of the International Finance Corporation, for their official use. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the 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