DA ITAD BIR Ruling No. 106-08

December 18, 2008 DA ITAD BIR RULING NO. 106-08 Secs. 106 & 108 of the NIRC of 1997, as amended; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. ITAD-2-99 Embassy of the Russian Federation 1245, Acacia Road, Dasmarias Village Makati City, Manila Gentlemen : This has reference to your Note No. 179 dated November 1, 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 the Russian Federation specifically described as follows: Type of Use: Official Make: Toyota Camry 2.4 V Sedan Model Year: 2008 Color: Thermalyte (Silver Met) Fame Number: MR053BK4007028675 Engine Number: 2AZE109219 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" 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 VAT prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997, as amended (NIRC of 1997). DISEaC However, applying the principle of reciprocity, this Office may confirm VAT exemption of the Embassy of the Russian Federation and/or its personnel on their local purchase of locally assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of January 25, 2008, that the Government of the Russian Federation 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 Camry 2.4 V Sedan for the official use of the Embassy of the Russian Federation is exempt from VAT. (BIR Ruling No. ITAD-2-99 dated June 23, 1999) cdll 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