DA ITAD BIR Ruling No. 092-09

September 23, 2009 DA ITAD BIR RULING NO. 092-09 Sections 106 & 108, NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-46-05 Embassy of Australia Level 23, Tower 2, RCBC Plaza 6819 Ayala Ave. cor. Sen. Gil Puyat Ave., Makati City Gentlemen : This has reference to your Note Verbale No. 309/09 dated September 1, 2009, referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits of the Department of Foreign Affairs (DFA), requesting exemption from payment of taxes on the local purchase of one (1) unit motor vehicle for the official use of the Embassy of Australia, specifically described as follows: EDISaA Make Model Color Frame Number Engine Number Year Toyota Camry 2.4 V 2009 Thermalyte MR053BK4007035023 2AZE139946 A/T 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 goods or services; . . . ." (Emphasis supplied) Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT, which is an indirect tax, 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 of the National Internal Revenue Code of 1997 (NIRC of 1997), as amended. However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Embassy of Australia and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated February 10, 2009, that the government of Australia allows similar exemption to the Philippine Embassy and/or its personnel on their local purchases of motor vehicles thereat. Hence, the herein local purchase of one (1) unit of 2009 Toyota Camry 2.4 V A/T, for the official use of the Embassy of Australia, is exempt from VAT. (BIR Ruling No. DA-ITAD-46-05 dated May 25, 2005) cAaTED 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