DA ITAD BIR Ruling No. 126-06

October 23, 2006 DA ITAD BIR RULING NO. 126-06 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-150-04 British Embassy 17th Floor, LV Locsin Building 6752 Ayala Avenue 1226 Makati, Manila Attention: Mr. Jon Huseyin Mustafa Third Secretary (Visa and Immigration) Gentlemen : This has reference to your Note No. 146-06 dated September 19, 2006, referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for a refund of value-added tax (VAT) on the local purchase of a motor vehicle, for the personal use of Mr. Jon Huseyin Mustafa, Third Secretary (Visa and Immigration) of the British Embassy, specifically described as follows: Type of Use: Personal Make: Isuzu Crosswind Wagon Sportivo A/T Model Year: 2006 Chassis Number: PABTBR54F62037998 Engine Number: 4JA1-MOO535 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 the value-added tax (VAT) on its local purchases of locally-assembled motor vehicles. In other words, purchases by that Embassy and its diplomatic agents of locally-assembled motor vehicles shall in general, be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. SCaEcD However, applying the principle of reciprocity, this Office may grant exemption to the British Embassy and 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 October 18, 2005 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) unit of 2006 Isuzu Crosswind Wagon Sportivo A/T, for the personal use of Mr. Jon Huseyin Mustafa of the British Embassy is exempt from VAT. (BIR Ruling No. DA-ITAD-150-04 dated December 20, 2004) This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether Mr. Jon Huseyin Mustafa of the British Embassy is entitled to VAT exemption on the basis of reciprocity. The determination on whether your request for tax refund should be given due course is upon the Office which will be conducting the investigation for that purpose. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to the proper office for processing and investigation. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service