DA ITAD BIR Ruling No. 098-07

October 16, 2007 DA ITAD BIR RULING NO. 098-07 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-180-00 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Gentlemen : This has reference to your Note Verbale No. 118 dated June 27, 2007, referred to this Office by the Department of Finance (DOF) and the Office of Protocol, Department of Foreign Affairs (DFA), requesting for a tax-free purchase on a local motor vehicle for the official use of the Embassy of the Russian Federation, specifically described as follows: aTCAcI Make: Chrysler 300C 3.5 V6 Model Year: 2007 Color: Magnesium Engine Number: 7Y515193 Serial Number: 1C3H863G37Y515193 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; TDCaSE "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. However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Embassy of the Russian Federation on their local purchase of motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of August 24, 2007 that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchases of locally-assembled motor vehicles thereat. ICTDEa Hence, the herein local purchase of one (1) unit of 2007 Chrysler 300C 3.5 V6 for the official use of the Embassy of the Russian Federation is exempt from VAT. (BIR Ruling No. ITAD-180-00 dated November 29, 2000) 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. EIDATc Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner