DA ITAD BIR Ruling No. 125-07

December 17, 2007 DA ITAD BIR RULING NO. 125-07 Sec. 106 & 108, Sec. 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-097-00 Embassy of Finland 21F, BPI Buendia Center Sen. Gil Puyat Ave. Makati City Gentlemen : This has reference to your Note No. MNI5005-52 dated November 29, 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) and ad valorem taxes on the local purchase of one (1) motor vehicle, for the official use of the Embassy of Finland, specifically described as follows: ISTCHE Make: Mitsubishi Pajero SUV 4X2 Model Year: 2007 Color: White Engine Number: 4M41-MAB0682 VIN Number: PAEV45RX27B003504 C/S Number: BG-2756 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. caIACE However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Finland 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 November 8, 2007, that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the local purchase of one (1) unit of 2007 Mitsubishi Pajero SUV 4X2, for the official use of the Embassy of Finland is exempt from value-added lax and ad valorem taxes. (BIR Ruling No. ITAD 097-00 dated August 2, 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 parties are concerned. SCHATc Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service