DA ITAD BIR Ruling No. 095-14

November 12, 2014 DA ITAD BIR RULING NO. 095-14 Principle of Reciprocity; BIR Ruling No. ITAD-191-12 Royal Norwegian Embassy 21st Floor, Petron Mega Plaza Building 358 Senator Gil Puyat Avenue 1209 Makati City Attention: Mr. Odd Kristian Netland First Secretary Gentlemen : This has reference to your Note No. 73/14 dated September 26, 2014 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), on the report of sale of a tax-exempt motor vehicle owned by Mr. Per-Jonas Xia Mehus, Second Secretary of the Royal Norwegian Embassy to Mr. Odd Kristian Netland, First Secretary, also of the same Embassy, specifically described as follows: Make Model Chassis Number Engine Number Plate Year Number Mitsubishi Montero 2012 MMBGYKG40CF021245 4D56-UCDJ0371 5204 SPT 2.5 GLS VGT 4x2 AT 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 the goods and services; AIDcTE 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 Royal Norwegian Embassy 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 Norway allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Norway. Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2012 Mitsubishi Montero SPT 2.5 GLS VGT 4x2 AT by Mr. Per-Jonas Xia Mehus to Mr. Odd Kristian Netland, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-191-12 dated May 21, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Assistant Commissioner Legal Service Bureau of Internal Revenue