DA ITAD BIR Ruling No. 105-09

December 2, 2009 DA ITAD BIR RULING NO. 105-09 Secs. 106 & 108 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-084-09 Embassy of Japan 2627 Roxas Boulevard Pasay City Attention: Mr. Ryoji Noda Counsellor Gentlemen : This has reference to your Note No. 461-09 dated 27 October 2009 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added tax (VAT) on the purchase of a previously-owned and tax-exempted motor vehicle for the personal use of Mr. Ryoji Noda, Counsellor of the Embassy of Japan from Mr. Hideaki Harada, Counsellor of the same Embassy, specifically described as follows: Make: Toyota Altis Model Year: 2005 Frame Number: ZZE1229003487 Engine Number: 1ZZ4399590 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." (Emphasis supplied) 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). IAEcCT However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Japan and/or its personnel on their purchase of locally-assembled motor vehicles it appearing from the list submitted by the DFA dated 10 February 2009 that the Government of Japan allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in Japan. Hence, since the transferor and the transferee of the subject motor vehicle, both of the Embassy of Japan, are VAT exempt individuals, the sale of one (1) unit 2005 Toyota Altis by Mr. Ryoji Noda to Mr. Hideaki Harada, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-084-09 dated 8 September 2009) 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service