DA ITAD BIR Ruling No. 100-07

October 23, 2007 DA ITAD BIR RULING NO. 100-07 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-11-00 Royal Embassy of Belgium 9/F Multinational Bancorporation Center 6805 Ayala Avenue Makati City Gentlemen : This has reference to your Note Verbale No. 883 dated September 12, 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 personal use of Mr. Rene Peeters, Deputy Head of Mission & Consul of the Royal Embassy of Belgium, specifically described as follows: Type of Use: Official Make: Toyota Innova G Gas 2.0M/T Model Year: 2010 Chassis Number: TGN40-5021519 Engine Number: 1TR-6946062 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: DAaIEc "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; 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 Royal Embassy of Belgium or its personnel 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. SECATH Hence, the herein local purchase of one (1) unit of 2007 Toyota Fortuner 4X4 V Diesel A/T for the personal use of the Royal Embassy of Belgium is exempt from VAT. (BIR Ruling No. ITAD-11-00 dated January 19, 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. TADaCH Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner