DA ITAD BIR Ruling No. 097-08

November 11, 2008 DA ITAD BIR RULING NO. 097-08 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-64-06 Royal Norwegian Embassy 21st Floor, Petron Mega Plaza Bldg. 358 Sen. Gil Puyat Avenue Makati City Gentlemen : This has reference to your Note Verbale No. 30/08 dated September 18, 2008, 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 for a tax-free purchase of a locally-assembled motor vehicle for the personal use Ms. Siri Maria Midr, First Secretary of the Royal Norwegian Embassy, specifically described as follows: Make: Nissan X-Trail 2.5L 4X4 A/T Model Year: 2008 Color: Black X Engine Number: QR25-544511A Chassis Number: TDBNLAAT30-A54223 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: DcCITS "(a) indirect taxes of a kind which are normally incorporated in the price of goods or services; "xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value added tax (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, both of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm the VAT exemption of the Royal Norwegian Embassy and/or its personnel on their purchase of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008, that the Government of Norway allows similar exemption to Philippine Embassy and/or its personnel on their purchases of locally-assembled motor vehicles thereat. Hence, the herein local purchase of one (1) unit of 2008 Nissan X-Trail 2.5L 4X4 A/T for the personal use Ms. Siri Maria Midr, First Secretary of the Royal Norwegian Embassy is exempt from VAT. (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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service