DA ITAD BIR Ruling No. 105-10

December 16, 2010 DA ITAD BIR RULING NO. 105-10 Secs. 106 & 109 of the Tax Code 1997; Article 34, Vienna Convention; DA-ITAD BIR Ruling No.-014-07 Embassy of the Republic of Italy 6th Floor, Zeta II Building, 191 Salcedo Street, Legaspi Village Makati City Attention: Dr. Adriano Stefanutti Attach, Head of Consular and Administrative Section Gentlemen : This has reference to your Indorsement letter dated October 19, 2010, referred to this Office by the Department of Foreign Affairs, Office of Protocol, requesting for exemption from the payment of value added tax (VAT) on the local purchase of a motor vehicle for Dr. Adriano Stefanutti, Attach, Head of Consular and Administrative Section of the Embassy of the Republic of Italy, specifically described as follows: Type of Use: Personal Make: Mitsubishi Montero Sport 2.5 GLS 4X2 Model Year: 2010 Serial Number: MMBGRKG40BFO14349 Engine Number: 4D56UCCG9307 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: "(a) indirect taxes of a kind which are normally incorporated in the price of the goods and services; EHCcIT "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 their local purchase of goods and services. In other words, purchases by that Embassy or its agents of goods and 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 Republic of Italy 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 the Government of Italy allows similar exemption to the Philippine Embassy in Italy and its personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) 2010 Montero Sport 2.5 GLS 4X2 for the personal use of Dr. Adriano Stefanutti, Attach, Head of Consular and Administrative Section of the Embassy of the Republic of Italy is exempt from VAT. (BIR Ruling No. DA-ITAD 14-07 dated February 6, 2007) As for the sale made by a VAT-registered business establishment to a qualified foreign embassy or its diplomatic agent, it shall enjoy the benefit of zero percent (0%) VAT pursuant to Revenue Memorandum n 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. cIHDaE Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service n Note from the Publisher: Copied verbatim from the official document. The term "Revenue Memorandum" should read as "Revenue Memorandum Order".