DA ITAD BIR Ruling No. 092-07

September 24, 2007 DA ITAD BIR RULING NO. 092-07 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. ITAD-52-00 Embassy of Spain 27th Floor, Yuchengco Tower RCBC Plaza Ayala Ave. cor. Sen. Gil Puyat Ave. Makati City Attention: Mr. Francisco Javier Casanova Alvarez Economic and Commercial Counsellor Gentlemen : This has reference to your Note Verbale No. 96 dated August 3, 2007, referred to this Office by the Office of Protocol and State Visits, Department of Foreign Affairs (DFA), requesting for a tax-free purchase on a local motor vehicle for the personal use of Mr. Francisco Javier Casanova Alvarez, Economic and Commercial Counsellor of the Embassy of Spain, specifically described as follows: Make: Mitsubishi Outlander GLS Model Year: 2007 Color: Adobe Gray Engine Number: 6B31AG3314 Frame Number: JMYXLCW6W7Z000159 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: CAHaST "(a) indirect taxes of a kind which are normally incorporated in the price of goods or 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 of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Embassy of Spain or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of August 23, 2007 that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchases of local goods and services. Hence, the herein local purchase of one (1) unit of 2007 Mitsubishi Outlander GLS for the personal use of Mr. Francisco Javier Casanova Alvarez, Economic and Commercial Counsellor of the Embassy of Spain is exempt from VAT. (BIR Ruling No. ITAD-052-00 dated March 2, 2000) 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.) GREGORIO V. CABANTAC Deputy Commissioner