DA ITAD BIR Ruling No. 096-10

November 22, 2010 DA ITAD BIR RULING NO. 096-10 Secs. 106 & 108; Sec. 149 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-45-06 Embassy of Australia Level 23, Tower 2, RCBC Plaza 6819 Ayala Avenue, Makati City Makati City Attention: Ms. Jill Leighton Brunson Second Secretary Gentlemen : This has reference to your Note No. 287/10 and File No. MN10/712 dated September 20, 2010, referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of taxes on the purchase of a locally-assembled motor vehicle, for the personal use of Ms. Jill Leighton Brunson, Second Secretary of the Embassy of Australia, specifically described as follows: HCTaAS Type of Use: Personal Make: Toyota Vios 1.5G A/T Model Year: 2010 Engine Number: 1NZ-Y 129075 Frame Number: NCP93-8008843 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; "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT and ad valorem tax, which are indirect taxes, on their local purchase of goods and services. In other words, purchases made by the Embassy or its diplomatic agent of goods or services shall, in general, be subject to VAT under Sections 106 and 108, and ad valorem tax under Section 149, of the National Internal Revenue Code of 1997 (NIRC of 1997), as amended. However, applying the principle of reciprocity, this Office may confirm the exemption from VAT and ad valorem tax of the Embassy and its diplomatic agents on their purchase of motor vehicles it appearing from the list submitted by the DFA dated March 22, 2010, that the Government of Australia allows similar exemption to the Philippine Embassy in Australia and its personnel on their local purchase of motor vehicles thereat. Hence, the local purchase of one (1) unit of Toyota Vios 1.5G A/T for the personal use of Ms. Jill Leighton Brunson, Second Secretary of the Embassy of Australia, is exempt from VAT and ad valorem tax on the basis of reciprocity. (BIR Ruling No. DA-ITAD 45-06 dated April 26, 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. ATcEDS Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service