DA ITAD BIR Ruling No. 155-06

December 13, 2006 DA ITAD BIR RULING NO. 155-06 Sec 109 - National Internal Revenue Code 1997; Article III, Section 10 - Vienna Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations; BIR Ruling No. DA-ITAD-01-04 United Nations Children Fund (UNICEF) 31F Yuchengco Tower, RCBC Plaza 6819 Ayala Avenue Makati City Gentlemen : This refers to your letter dated October 13, 2000, indorsed to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) of ten (10) locally-purchased motor vehicles, for the official use of the United Nations Children's Fund (UNICEF), specifically described as follows: Make Model Year Color Chassis Engine Number Number Toyota 4X4 Hi 2006 Lithium MR0FZ29G2- 1KD-7167266 Lux 3.0 01538335 Toyota 4X4 Hi 2006 Lithium MR0FZ29G0- 1KD-7173658 Lux 3.0 01538527 Toyota 4X4 Hi 2006 Lithium MR0FZ29G1- 1KD-7167461 Lux 3.0 01538326 Toyota 4X4 Hi 2006 Lithium MR0FZ29G5- 1KD-7170769 Lux 3.0 01538491 Toyota 4X4 Hi 2006 Lithium MR0FZ29G8- 1KD-7167153 Lux 3.0 01538341 Toyota 4X4 Hi 2006 Lithium MR0FZ29G5- 1KD-7169867 Lux 3.0 01538460 Toyota 4X4 Hi 2006 Lithium MR0FZ29G8- 1KD-7168640 Lux 3.0 01538369 Toyota 4X4 Hi 2006 Lithium MR0FZ29G9- 1KD-7168885 Lux 3.0 01538364 Toyota 4X4 Hi 2006 Lithium MR0FZ29G4- 1KD-7177081 Lux 3.0 01538546 Toyota 4X4 Hi 2006 Lithium MR0FZ29G7- 1KD-7166731 Lux 3.0 01538296 In reply, please be informed that Section 109 of the National Internal Revenue Code of 1997 (NIRC), as amended by Section 7 of Republic Act No. 9337 dated November 1, 2005 , provides as follows: "SEC. 109. Exempt Transactions . Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529;" In relation thereto, Section 10, Article III of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations dated November 21, 1947 provides: "Article III xxx xxx xxx Section 10 While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax. "xxx xxx xxx" Based on the above provisions, important purchases for official use of property in the Philippines of the specialized agencies of the United Nations (UN) are accorded exemption from indirect taxes such as VAT imposed under Section 107 of the NIRC. Such being the case, and since the UNICEF is a specialized agency of the UN, this Office is of the opinion and so holds that aforementioned purchase of ten (10) units 2006 Toyota 4X4 Hi Lux 3.0 Diesel, for the official use of the UNICEF, is exempt from VAT. It is hereby understood that this exemption applies only to vehicles purchased under the name of United Nations Children's Fund for its official use. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service