DA ITAD BIR Ruling No. 121-06

October 12, 2006 DA ITAD BIR RULING NO. 121-06 Sec 106 & 108, Sec 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-37-04 Embassy of the People's Republic of Korea Unit 1002 10th Floor, Ayala Life FGU Center Ayala Avenue Makati City Attention: Mr. Hong Chang Seok Deputy Trade Commissioner of Korea Trade Investment Promotion Agency (KOTRA) Gentlemen : This has reference to your Note No. 06-2187 dated August 31, 2006 referred 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 local purchase of one (1) motor vehicle, for the personal use of Mr. Hong Chang Seok, Deputy Trade Commissioner of Korea Trade Investment Promotion Agency (KOTRA), specifically described as follows: Make: Toyota Fortuner 4X2 G Diesel A/T Model Year: 2006 Color: Lithium Silver Metallic Engine Number: 2KD-7149581 Chassis Number: MROZR69G7-00003270 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 goods or services; xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and/or its diplomatic agents does not include exemption from value-added tax (VAT) and ad valorem tax on its local purchases of goods and services. In other words, purchases by that Embassy and its diplomatic agents of goods and/or services shall in general, be subject to the value-added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the People's Republic of Korea 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 October 18, 2005, that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in your country. CIHTac Hence, the local purchase of one (1) unit of 2006 Toyota Fortuner 4X2 G Diesel A/T for the personal use of Mr. Hong Chang Seok, Deputy Trade Commissioner of Korea Trade Investment Promotion Agency is exempt from value-added tax. (BIR Ruling No. 37-04 DA-ITAD dated April 20, 2004) 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