ITAD BIR Ruling No. 006-10

April 30, 2010 ITAD BIR RULING NO. 006-10 Secs. 106 & 108, NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations Embassy of Mexico Unit 87, The Collonade Residences 132 Legaspi Street, Legaspi Village Makati City, Manila Attention: Ms. Carina Garcia Guerra Attach Gentlemen : This has reference to your Note No. 0258/131.4 dated February 19, 2010, referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of taxes on the purchase of a locally-assembled motor vehicle, for the personal use of Ms. Carina Garcia Guerra, Attach of the Embassy of Mexico, specifically described as follows: HaECDI Type of Use: Personal Make: Mitsubishi Lancer 1.6 GLS A/T Model Year: 2010 Chassis Number: MMBSRCS309F002194 Engine Number: 4G18-AB2553 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." (Emphasis supplied) Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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 VAT prescribed under Sections 106 & 108 of the National Internal Revenue Code (NIRC) of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm exemption to the Embassy of Mexico and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated March 22, 2010 that the government of Mexico allows similar exemption to the Philippine Embassy and/or its personnel on their purchase of motor vehicles in Mexico. Hence, the local purchase of one (1) unit of 2010 Mitsubishi Lancer 1.6 GLS A/T, for the personal use of Ms. Carina Garcia Guerra, Attach of the Embassy of Mexico is exempt from VAT. This ruling is issued on the basis of the facts as 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. ATESCc Very truly yours, (SGD.) JOEL L. TAN-TORRES Commissioner of Internal Revenue