DA ITAD BIR Ruling No. 101-07

October 24, 2007 DA ITAD BIR RULING NO. 101-07 Sec. 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations Embassy of the State of Kuwait 1230 Acacia Street Dasmarias Village Makati City Attention: H.E. Bader Nasser Al Douti Ambassador Gentlemen : This has reference to your Note Nos. EKM 07-222 dated August 29, 2007 and EKM 07-248 dated September 25, 2007, 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 local purchase of a motor vehicle, for the official use of the Embassy of the State of Kuwait, specifically described as follows: AEHTIC Type of Use: Official Make: Toyota Camry 2.4V A/T Model Year: 2007 Color: Xtreme Black Chassis Number: MR053BK4007016022 Engine Number: 2AZE057330 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 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 value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of the State of Kuwait on their purchase of locally-assembled 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 the Philippine Embassy on their purchase of locally-assembled motor vehicles in your country. TAIEcS Hence, the local purchase of one (1) unit of 2007 Toyota Camry 2.4V A/T, for the official use of the Embassy of State of Kuwait is exempt from value-added tax. (BIR Ruling No. DA-ITAD-068-05 dated July 4, 2005) 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. AcHSEa Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner