ITAD BIR Ruling No. 357-12

October 18, 2012 ITAD BIR RULING NO. 357-12 Sections 149 and 188, National Internal Revenue Code of 1997, as amended Asian Development Bank 6 ADB Avenue Mandaluyong City Attention: Alexander Tarnoff Unit Head, Logistics Management Gentlemen : This refers to your request dated August 15, 2011 for the issuance of a ruling on the sale of the following motor vehicle by Mr. Feng Gong (Director's Advisor, Asian Development Bank) to Mr. Min-Kyu Kang (Technical Officer, NHP, World Health Organization) under a Deed of Sale dated July 15, 2011, to wit: Make and Model : Honda CRV Model Year : 2008 Motor/Engine No. : K24Z12806509 Chassis No. : MRHRE48408P020740 License Plate No. : 25863 (returned on July 21, 2011) Relative thereto, please be informed that Sections 15 (g) and 22 (g) of the Host Agreement between the Republic of the Philippines and the World Health Organization ("WHO") 1 provide: "ARTICLE VI REPRESENTATIVES OF MEMBERS Section 15. Representatives of Members of the Organization on its principal or subsidiary organs and at conferences or meetings convened by the Organization, shall while exercising their functions and during their journeys to and from the place of meeting, enjoy the following privileges and immunities: CIHTac xxx xxx xxx (g) Such other privileges, immunities and facilities not inconsistent with the foregoing as members of diplomatic missions of comparable rank enjoy, except that they shall have no right to claim exemption from customs duties on articles imported (otherwise than as part of their personal baggage) or from indirect taxes or sales taxes." xxx xxx xxx Under Section 22(g), officials of WHO Organization shall: xxx xxx xxx (g) once every three years have the right to import free of duty a motor-car it being understood that the duty will become payable in the event of the sale or disposal of such motor-car to a person not entitled to this exemption within three years upon its importation." As provided, representatives of member countries of WHO shall enjoy privileges as those normally accorded to members of diplomatic missions of comparable rank. However, they are not entitled to exemption from customs duties on articles imported (otherwise than as part of their personal baggage) or from indirect taxes or sales taxes. Also, officials of WHO shall have the right to import free of duty a motor vehicle once every three years. Accordingly, since the Host Agreement does not expressly exempt a representative or an official of WHO on his purchase of motor vehicle in the Philippines for personal use, either originally from authorized distributors or subsequently from privileged and non-privileged sellers, and in case no excise taxes have been previously paid for the subject Honda CRV model 2008 by reason of Mr. Gong's exemption, this Office hereby rules that the sale by Mr. Gong of ADB of his Honda CRV Model 2008 to Mr. Kang of WHO shall be subject to excise tax under Section 149 of the National Internal Revenue Code of 1997 (" Tax Code "), as amended, in relation to Section 8 of Revenue Regulations No. 25-2003 , 2 and to documentary stamp tax of P15.00 under Section 188 of the Tax Code, to wit: SICaDA "SEC. 149. Automobiles . There shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer's or importer's selling price, net of excise and value-added tax, in accordance with the following schedule: Net manufacturer's price/ Rate importer's selling price Up to P600 Thousand 2% Over P600 Thousand to P1.1 Million P12,000 + 20% of value in excess of P600 Thousand Over P1.1 Million to P2.1 Million P112,000 + 40% of value in excess of P1.1 Million Over P2.1 Million P512,000 + 60% of value in excess of P2.1 Million" "SEC. 8. Tax Treatment on Subsequent Sale, Transfer or Exchange of Tax-Exempt Automobile by a Tax-Exempt Person/Entity to a Non-Exempt Person/Entity . In cases where a tax-exempt person/entity acquired an automobile, whether locally purchased or imported, without payment of the tax by reason of his/their exemption, the purchase thereof by a non-exempt person/entity shall be subjected to the ad valorem tax based on the higher of (i) actual consideration between the tax-exempt person/entity and the non-exempt person/entity; or (ii) the depreciated value of the automobile at the time of sale, transfer, or exchange which depreciation rate shall be at ten percent (10%) per year, but in no case shall the total amount of depreciation be more than fifty percent (50%) of the original cost or value. However, in case where the automobile was acquired by the tax-exempt person or entity prior to but sold after the effectivity of the Act, the computation of the ad valorem tax shall be governed by the Act." "SEC. 188. Stamp Tax on Certificates . On each certificate of damages or otherwise, and on every certificate or document issued by any customs officer, marine surveyor, or other person acting as such, and on each certificate issued by a notary public, and on each certificate of any description required by law or by rules or regulations of a public office, or which is issued for the purpose of giving information, or establishing proof of a fact, and not otherwise specified herein, there shall be collected a documentary stamp tax of Fifteen pesos (P15.00)." Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Approved by the World Health Assembly on May 21, 1952 and by the Government of the Philippines on August 22, 1952. The Agreement entered into force on September 29, 1952. 2. Amended Revenue Regulations Governing the Imposition of Excise Tax on Automobiles pursuant to the Provisions of Republic Act No. 9224, An Act Rationalizing the Excise Tax on Automobiles, Amending for the Purpose the National Internal Revenue Code of 1997, and for Other Purposes .