DA ITAD BIR Ruling No. 094-14

November 12, 2014 DA ITAD BIR RULING NO. 094-14 Principle of Reciprocity; BIR Ruling No. ITAD-025-12 Embassy of Brunei Darussalam 11th Floor Ayala Wing, BPI Building Ayala Avenue Corner Paseo De Roxas 1226 Makati City Gentlemen : This has reference to your Note No. 115-2014 dated September 29, 2014 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added tax (VAT) on the local purchase of a motor vehicle for the official use of the Embassy of Brunei Darussalam, specifically described as follows: Type of Use: Official Make: Toyota Fortuner 4x4 3.0L V Dsl A/T Model Year 2014 Color: Extreme Black Frame Number: MHFYZ59G904010884 Engine Number: 1KDU585837 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: AEDISC (a) indirect taxes of a kind which are normally incorporated in the price of the goods and services; xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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 of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Brunei Darussalam and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated October 13, 2014 that the Government of Brunei Darussalam allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Brunei. In view thereof, the local purchase of one (1) unit of 2014 Toyota Fortuner 4x4 3.0L V Dsl A/T for the official use of the Embassy of Brunei Darussalam, being an entity exempt from VAT, shall be subject to VAT at zero-percent (0%) rate pursuant to Section 106 (A) (2) (c) of the NIRC of 1997 as amended. (BIR Ruling No. ITAD-025-12 dated January 31, 2012) 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. TDcAIH Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service Bureau of Internal Revenue