DA ITAD BIR Ruling No. 103-08

December 11, 2008 DA ITAD BIR RULING NO. 103-08 Secs. 106 & 108 of the NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-168-06 Embassy of Australia 23rd Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil Puyat Ave., Makati City Gentlemen : This has reference to your Note No. 384/08 and File No. MN94/00110 dated October 29, 2008 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of value-added tax (VAT) on the local purchase of one (1) unit motor vehicle for the official use of the Embassy of Australia specifically described as follows: Type of Use: Official Make: Toyota Fortuner 4X2 G Gas A/T Model Year: 2008 Color: Lithium Frame Number: MHFZX69G607011490 Engine Number: 2TR6650345 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: DHSCEc "(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 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 of the National Internal Revenue Code of 1997, as amended (NIRC of 1997). However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Embassy of Australia and/or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008, that your Government allows a similar exemption to Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles thereat. Hence, the local purchase of one (1) unit of 2008 Toyota Fortuner 4X2 G Gas A/T for the official use of the Embassy of Australia is exempt from VAT. (BIR Ruling No. ITAD-168-06 dated December 21, 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. IHTASa Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service