DA ITAD BIR Ruling No. 109-07

November 20, 2007 DA ITAD BIR RULING NO. 109-07 Secs. 106 & 108 of the National Internal Revenue Code of 1997; Article 34 of the Vienna Convention; BIR Ruling No. ITAD-165-03 Embassy of the United States of America 1201 Roxas Boulevard Manila Attention: Mr. Scott McDonald Contracting Officer Gentlemen : This has reference to your Note Verbale No. 1265 dated September 25, 2007 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a tax-free purchase of one (1) locally assembled motor vehicle described hereunder for official use by the Embassy of United States of America: HSaIET Type of Use: Official Make: Ford Ranger 4X4 M/T XLT Model Year: 2007 Color: Highlight Silver/T Gray Chassis Number: MNCLSFE907W616355 Engine Number: WEAT 112334 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: ECTAHc "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 value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. AcICHD However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the United States of America and/or its personnel on their purchases of locally-assembled 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 its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the herein local purchase of one (1) unit of 2007 Ford Ranger 4X4 M/T XLT for the official use of the Embassy of the United States of America is exempt from VAT. (BIR Ruling No. ITAD-13-00 dated January 24, 2000) 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 party is concerned. CSIDEc Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner