DA ITAD BIR Ruling No. 150-06

December 8, 2006 DA ITAD BIR RULING NO. 150-06 Secs. 106 & 108 of the National Internal Revenue Code of 1997; Article 34 of the Vienna Convention; BIR Ruling No. ITAD-34-99 Embassy of the United States of America Roxas, Boulevard Manila Attention: Mr. Marvin Burgos Special Agent (Inspector, USAID) Gentlemen : This has reference to your Note Verbale No. 1395 dated October 4, 2006 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a tax-free purchase of one (1) locally assembled motor vehicle described hereunder, for the personal use of Mr. Marvin Burgos, Inspector, USAID of the Embassy of the United States of America: Make: Toyota Fortuner 4X2 G Gas A/T Model Year: 2006 Color: Lithium Frame No.: MR0ZX69G4-00008626 Engine No.: 2TR-6271720 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 its diplomatic agents does not include exemption from the 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of the United States of America 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 that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchases of goods and services in your Country. CTIDcA Hence, the herein local purchase of one (1) unit of Toyota Fortuner 4X2 G Gas A/T for the personal use of Mr. Marvin Burgos, Special Agent (Inspector, USAID) of the Embassy of the United States of America is exempt from VAT (BIR Ruling No. DA-ITAD-34-99 dated October 18, 1999) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service