DA ITAD BIR Ruling No. 101-10

December 13, 2010 DA ITAD BIR RULING NO. 101-10 Secs. 106 & 109 of the Tax Code 1997; Article 34, Vienna Convention; DA-ITAD BIR Ruling No. 100-07 Embassy of the Kingdom of Belgium 9th Floor, Multinational Bancorporation Center 6805 Ayala Avenue Makati City Gentlemen : This has reference to your Indorsement letter dated October 14, 2010, referred to this Office by the Department of Finance and the Department of Foreign Affairs, Office of Protocol, requesting for exemption from payment of value added tax (VAT) of the local purchase of one (1) unit of 2010 Toyota Innova G Gas 2.0M/T 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 pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which reads: "ARTICLE 34 "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: cDAISC "(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 purchase of goods and services. In other words, purchases by that Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of the Kingdom of Belgium or its personnel on their local purchase of goods and services it appearing from the list submitted by the Department of Foreign Affairs as of March 22, 2010, that your Government allows similar exemption to the Philippine Embassy in Belgium and its personnel on their purchase of goods and services in that country. Hence, the local purchase of one (1) 2010 Toyota Innova G Gas 2.0M/T for the official use of the Embassy of the Kingdom of Belgium is exempt from VAT. (BIR Ruling No. DA-ITAD 100-07 dated October 23, 2007) As for the sale made by a VAT-registered business establishment to a qualified foreign embassy, that establishment shall enjoy the benefit of zero percent (0%) VAT pursuant to Revenue Memorandum Order No. 22-2004. This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation, it will 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, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service