DA ITAD BIR Ruling No. 135-06

October 31, 2006 DA ITAD BIR RULING NO. 135-06 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. ITAD-156-02 Delegation of European Commission in the Philippines 7th Floor, Salustiana D. Ty Tower 104 Paseo de Roxas Legaspi Village Makati City Attention: Mr. Holger Rommen First Secretary Gentlemen : This has reference to your Note No. 06-131 dated September 11, 2006 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), Office of Protocol, requesting for the exemption from payment value-added tax (VAT) on the local purchase of one (1) unit motor vehicle for the personal use of Mr. Holger Rommen, First Secretary and Head of Contracts & Finance of the Delegation of the European Commission, specifically described as follows: Make: Hyundai Starex GRX Jumbo 2.5L CRDi MT Model Year: 2006 Color: Noble White Engine Number: D4CB6036171 Frame Number: KMJWWH7JP6U751056 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which 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 its diplomatic agents does not include exemption from the VAT on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemption to Mr. Holger Rommen, a German national, and whose Embassy in the Philippines is included in the updated list of diplomatic missions entitled to VAT exemption on purchase of locally-assembled motor vehicles on the basis of reciprocity as confirmed by the Office of Protocol of the DFA in its letter dated October 18, 2005 that his Government allows similar exemption to Philippine Embassy personnel on their purchases of goods and services in your country. Hence, the herein local purchase of one (1) unit of 2006 Hyundai Starex GRX Jumbo 2.5L CRDi MT, for the personal use of Mr. Holger Rommen, First Secretary and Head of Contracts & Finance of the Delegation of the European Commission in the Philippines is hereby granted. (BIR Ruling No. ITAD-156-02 dated September 10, 2002) IDAEHT Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service