DA ITAD BIR Ruling No. 104-09

December 2, 2009 DA ITAD BIR RULING NO. 104-09 Sec. 109, NIRC of 1997; Article III, Section 10, Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-112-06 United Nations-World Food Programme 5th Floor G.C. Corporate Plaza, (formerly Jaka II Building) 150 Legazpi Street, Legaspi Village 126 Makati City Gentlemen : This refers to your letter dated 21 October 2009, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) on the local purchase of five (5) units of motor vehicles for the official use of the United Nations-World Food Programme (UN-WFP), specifically described as follows: Make Chassis Number Engine Number 1 MR0FZ29G101570497 1KD-7840252 2 2010 Toyota Hi-Lux MR0FZ29G101572136 1KD-7853778 3 (4X4 3.0L, Diesel) M/T MR0FZ29G901572241 1KD-7854414 4 MR0FZ29G201571979 1KD-7852338 5 MR0FZ29G001572015 1KD-7852808 In reply, please be informed that Section 109 of the National Internal Revenue Code (NIRC) of 1997, as amended provides as follows: "SEC. 109. Exempt Transactions. Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" In relation thereto, Article III, Section 10 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated 21 November 1947 provides: CDTSEI "Article III xxx xxx xxx Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax. "xxx xxx xxx" The aforecited provision of the UN Convention clearly requires that to be entitled to a possible remission or return of the amount of duty or tax, the subject purchase must be for official use of the specialized agency. But in lieu of remission or return of the amount of duty or tax related to the purchase for official use, a tax exemption privilege is instead granted. 1 Such being the case, and since the UN-WFP is a specialized agency of the UN, this Office is of the opinion and so holds that aforementioned purchase of five (5) units 2010 Toyota Hi-Lux 4X4 3.0L Diesel M/T for the official use of the UN-WFP, is exempt from VAT. (BIR Ruling No. DA-ITAD-112-06 dated 19 September 2006) It is hereby understood that this exemption applies only to vehicles purchased under the name of UN-WFP for its official use. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service Footnotes 1. BIR Ruling No. ITAD-46-07 dated 11 April 2007 citing VAT Ruling No. 143-90 which revoked VAT Ruling No. 176-89.