Asian Development Bank

March 8, 2018 ITAD BIR RULING NO. 030-18 Article XII Sections 44 and 45 of the Philippines- ADB Headquarters Agreement Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Attention: AAA ________________ Gentlemen : This refers to your letter dated 12 July 2017 expressing your appreciation for the amendment through Revenue Regulations (RR) No. 4-2017 of certain provisions of RR No. 2-2016 and the one-time ruling dated 17 May 2017 (BIR Ruling No. ITAD-017-17) confirming the exemption of Asian Development Bank (ADB) from securing Authority to Release Imported Goods (ATRIGs) for imported automobiles; and requesting for clarification regarding the scope of such exemption to ensure that it covers officers under Sections 44 and 45 of the Agreement Between the Asian Development Bank and the Government of the Republic of the Philippines Regarding the Headquarters of the Asian Development Bank (Philippines-ADB Headquarters Agreement). ATICcS In reply, please be informed that Sections 44 and 45, Article XII of the Philippines-ADB Headquarters Agreement states that: " ARTICLE XII Privileges and Immunities of Governors and Other Representatives of Members, Directors, President, Vice-President and Others Section 44 Governors, other representatives of Members, Directors, the President, Vice-President and executive officers as may be agreed upon between the Government and the Bank shall enjoy, during their stay in the Republic of the Philippines in connection with their official duties with the Bank: (a) Immunity from personal arrest or detention and from seizure of their personal baggage; (b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity; and (c) In respect of other matters not covered in (a) and (b) above, such other immunities, exemptions, privileges and facilities as are enjoyed by members of diplomatic missions of comparable rank, subject to corresponding conditions and obligations . Section 45 Officers and staff of the Bank, including for the purposes of this Article experts and consultants performing missions for the Bank, shall enjoy the following privileges and immunities: (a) Immunity from legal process with respect to acts performed by them in their official capacity except when the Bank waives the immunity; (b) Exemption from taxation on or in respect of the salaries and emoluments paid by the Bank subject to the power of the Government to tax its nationals; (c) Immunity, together with their spouses, dependents, and members of their household staffs, from immigration restrictions, subject to regulations of health and security of the State and aliens' registration; (d) Exemption in respect of exchange restrictions no less favourable than that accorded to officials of comparable rank of diplomatic missions; (e) Repatriation facilities in time of international crisis, together with their spouses, dependents and members of their household staffs as are no less favourable than those accorded to diplomatic envoys; (f) The right to import, free of duty and other levies, prohibitions and restrictions on imports, their furniture and effects including one automobile, within twelve (12) months after first taking up their post in the Republic of the Philippines, and the same right to import one auto-mobile for replacement (3) years after the last importation. Should the previously imported automobile be sold, conveyed, or transferred, due notice shall be given by the Bank to the Government and delivery shall be made at the place designated by the Government in consultation with the Bank; and (g) The right to import, free of duty and other levies, prohibitions and restrictions on imports, through the medium of the Bank, reasonable quantities, to be agreed upon in accordance with a procedure to be established between the Government and the Bank, of foodstuffs and other articles for personal use and consumption and not for gift or sale. A cursory reading of the above provisions would reveal that importation of a motor vehicle by executive officers, other officers and staff of the bank, although free of duty and other levies, is not exempt from value-added tax (VAT) on importation. Under Section 44 paragraph (c), the ADB executive officers may be accorded privileges enjoyed by diplomatic missions of comparable rank, subject to certain conditions. However, the VAT exemption privilege on importation of vehicle accorded to qualified members of diplomatic missions in the Philippines is based on the principle of reciprocity which is being monitored by the Department of Foreign Affairs through Philippine Diplomatic Posts located in several jurisdictions. The principle of reciprocity is applicable only to diplomatic missions/embassies and not to executive officers of international organizations, such as the ADB. Moreover, the tax exemption referred to in Section 45 is in respect of the salaries and emoluments paid to these officers by the Bank, and not on importation of motor vehicle. In view of the foregoing, the executive officers enumerated in Section 44, and other officers and staff of the bank as stated in Section 45, are not exempt from securing ATRIGs. Hence, only ADB, the organization itself, is exempt from securing ATRIGs for imported automobiles. The requirement to secure ATRIGs applies to executive officers, officers and staff of ADB. BIR Ruling No. ITAD-017-17 is hereby amended as follows: "Accordingly, ADB, the organization itself, is exempt from securing ATRIGs. Meanwhile, executive officers, officers and staff of ADB are not exempt from securing ATRIGs." TIADCc Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue