DA ITAD BIR Ruling No. 112-06

September 19, 2006 DA ITAD BIR RULING NO. 112-06 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 United Nations-World Food Programme (UN-WFP) 5th Floor, Jaka II Building 150 Legaspi Street, Legaspi Village Makati City Gentlemen : This refers to your letter dated July 11, 2006, 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) and ad valorem tax on the purchase of one (1) locally-produced motor vehicles, for the official use of the United Nations-World Food Programme (UN-WFP), specifically described as follows: Make: Toyota Camry 2.4 V A/T Model Year: 2006 Color: Quick Silver Engine Number: 2AZ-2226612 Chassis Number: ACV30-9002175 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;" 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. "xxx xxx xxx" Based on the above provisions, important purchases of goods and services 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 the UN-WFP is a specialized agency of the UN, 1 this Office is of the opinion and so holds that aforementioned purchase of one (1) unit 2006 Toyota Camry 2.4 V A/T for the official use of the UN-WFP, is exempt from ad valorem and value-added taxes. It is hereby understood that this exemption applies only to vehicles purchased under the name of United Nations Fund for Population Activities 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. AScTaD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service Footnotes 1. VAT Ruling No. 146-90 dated May 24, 1990.