DA ITAD BIR Ruling No. 110-07

November 20, 2007 DA ITAD BIR RULING NO. 110-07 Sec 109 National Internal Revenue Code 1997; Article III, Section 10 Vienna Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-155-06 United Nations Children's Fund (UNICEF) 31st Floor, Yuchengco Tower RCBC Plaza, 6819 Ayala Avenue Makati City Attention: Colin Davis Deputy Representative Gentlemen : This refers to your letter dated August 6, 2007, 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 one (1) motor vehicle, for the official use of the United Nations Children's Fund (UNICEF), specifically described as follows: SEcITC Make: One (1) Toyota Hi Lux 4X4 3.0 Diesel M/T Model Year: 2007 Color: Lithium Engine Number: 1KD-7365274 Chassis Number: MROFZ29G701546205 In reply, please be informed that Section 109 of the National Internal Revenue Code of 1997 (NIRC), as amended by Section 7 of Republic Act No. 9337 dated November 1, 2005, 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;" AHaDSI In relation thereto, Section 10, Article III of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated November 21, 1947 provides: "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.(Emphasis supplied) DAETcC xxx xxx xxx" Based on the above provisions, important purchases of property (goods) in the Philippines for official use of the specialized agencies of the United Nations (UN) are accorded exemption from indirect taxes such as the VAT imposed under Section 107 of the NIRC. Such being the case, and since UNICEF is a specialized agency of the UN, this Office is of the opinion and so holds that aforementioned purchase of one (1) unit 2007 Toyota Hi Lux 4X4 3.0 Diesel M/T for the official use of UNICEF, is exempt from VAT. It is hereby understood that this exemption applies only to vehicles purchased under the name of UNICEF 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. DcSEHT Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner