ITAD Ruling No. 001-05

January 6, 2005 ITAD RULING NO. 001-05 Sec. 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-43-99 Embassy of Mexico 2157 Paraiso St., Dasmarias Village, Makati City Gentlemen : This has reference to your Note Verbale No. FIL-01152 dated November 12, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for a tax-free purchase of a locally purchased motor vehicle, for the official use of the Embassy of Mexico, specifically described as follows: Make/Model: Chevrolet Venture LT Model Year: 2005 Chassis Number: LSGDC82C93S208325 Engine Number: LW9-30912321 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which 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" 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 goods and services. In other words, purchases by that Embassy of goods and/or services shall be subject to the VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of Mexico and/or 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 June 22, 2004 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. aCHcIE Hence, the local purchase of one (1) 2005 Chevrolet Venture LT for the official use of the Embassy of Mexico is exempt from VAT. (BIR Ruling No. ITAD-43-99 dated November 9, 1999) 2005cdtai Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service