DA ITAD BIR Ruling No. 122-07

December 13, 2007 DA ITAD BIR RULING NO. 122-07 Sec. 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-126-05 The Royal Thai Embassy 107 Rada Street Legaspi Village Makati City Gentlemen : This has reference to your Note No. 40001/1046 dated November 12, 2007 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 Royal Thai Embassy specifically described as follows: TcAECH Type of Use: Official Make: Toyota Super Grandia D-4D 2.5L A/T Model Year: 2007 Color: White Pearl Frame Number: JTFRS13PX00007464 Engine Number: 2KD1689458 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 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 of the National Internal Revenue Code of 1997. AECDHS However, applying the principle of reciprocity, this Office may confirm the exemptions to the Royal Thai Embassy and/or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs as of August 24, 2007, that your Government allows similar exemptions 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 2007 Toyota Super Grandia D-4-D 2.5L A/T for the official use of the Royal Thai Embassy is exempt from VAT. (BIR Ruling No. ITAD-126-05 dated October 28, 2005) 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. ASCTac Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service