DA ITAD BIR Ruling No. 093-10

November 18, 2010 DA ITAD BIR RULING NO. 093-10 Sections 106 & 108, NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-DA-64-06 Royal Norwegian Embassy 21st Floor, Petron Mega Plaza Bldg. 358 Senator Gil Puyat Avenue Makati City Attention: Ms. Gro Snuggerud First Secretary Gentlemen : This has reference to your Note Verbale No. 62/10 dated September 24, 2010, 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 value-added tax (VAT) on the purchase of one (1) motor vehicle, for the personal use of Ms. Gro Snuggerud, First Secretary of the Royal Norwegian Embassy in the Philippines, specifically described as follows: TaCSAD Type of use: Personal Make: Toyota Fortuner 2.7L 4x2 G Gas A/T Year Model: 2010 Color: 1C0 Lithium Frame No.: MR0ZX69GX00100193 Engine No.: 2TR-6939875 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, both 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 and its diplomatic agent on the purchase of the said motor vehicle it appearing from the list submitted by the DFA dated March 22, 2010, that the Kingdom of Norway allows similar exemption to the Philippine Embassy and/or its personnel on their local purchases of motor vehicles thereat. Hence, the local purchase of one (1) unit of Toyota Fortuner 2.7L 4x2 G Gas A/T for the personal use of Ms. Gro Snuggerud, First Secretary of the Royal Norwegian Embassy, is exempt from VAT on the basis of reciprocity. (BIR Ruling No. DA-ITAD 64-06 dated June 6, 2006) 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. IHCESD Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service