DA ITAD BIR Ruling No. 104-07

November 14, 2007 DA ITAD BIR RULING NO. 104-07 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. DA-ITAD-34-99 Embassy of the United States of America 1201 Roxas Boulevard Manila Attention: Mr. Scott McDonald Supervisory General Services Officer Gentlemen : This has references to your Note Verbale No. 1185 dated September 14, 2007, referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits, Department of Foreign Affairs (DFA), requesting for tax-free purchase on local motor vehicles for the official use of the Embassy of United States of America, specifically described as follows: Make: Two (2) units Ford Everest 4X4 A/T 3.0L DuraTORQ TDCI Model Year: 2007 Color: Black/Arizona Gold Engine Number: 130307/130321 VIN Number: MNCUS4E907W205454/ MNCUS4E907W205486 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: IECAaD "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. IDTHcA However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Embassy of the United States of America 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. Hence, the herein local purchase of two (2) units of 2007 Ford Everest 4X4 A/T 3.0L DuraTORQ TDCI for the official use of the Embassy of the United States of America is exempt from VAT. (BIR Ruling No. ITAD-34-99 dated October 18, 1999) 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. AETcSa Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner