DA ITAD BIR Ruling No. 161-06

December 15, 2006 DA ITAD BIR RULING NO. 161-06 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling UN-085-94 Embassy of Brazil 17 Talisay Street, North Forbes Park Makati City Attention: Mr. Paulo Tarrisse da Fontoura Minister/Deputy Chief of Mission Gentlemen : This has reference to your Form MV-2A dated October 9, 2006, 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 tax on the local purchase of a motor vehicle, for the personal use of Mr. Paulo Tarrisse da Fontoura, Minister/Deputy Chief of Mission of the Embassy of Brazil, specifically described as follows: Type of Use: Personal Make: Mitsubishi Adventure Model Year: 2001 Chassis Number: PAEVB2WLR1B00195 Engine Number: 4G63AB6650 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: IEHScT "(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, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of Brazil 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 once (1) unit of 2001 Mitsubishi Adventure, for the personal use of Mr. Paulo Tarrise da Fontoura, Minister/Deputy Chief of Mission of the Embassy of Brazil is exempt from value-added tax and ad valorem tax. (BIR Ruling UN-085-94 dated March 7, 1994) This ruling is issued on the basis of the facts 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service