ITAD Ruling No. 002-99

June 23, 1999 ITAD RULING NO. 002-99 Sec 106 Sec 108 Embassy of the Russian Federation Metro Manila, Philippines Attention: Vladimir A . Proskouriakov Third Secretary Gentlemen : This refers to your letter dated May 18, 1999 requesting for exemption from value added tax (VAT) on the purchase of one (1) unit locally purchased Honda City 1.3 Lxi, Model 1999 (4 door sedan, gas 1.3li. SOHC, PGM-FI, 5 speed manual transmission, 95 hp) with engine no. P3RD1-P201145 and chassis no. PAD3A 1530WV001192 for the personal use of Mr. Vladimir A. Proskouriakov, Third Secretary, Embassy of the Russian Federation. 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 cdll "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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 value added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of the Russian Federation or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) Honda City '99 1.3 LXi 4-dr Sedan, for the personal use of Mr. Vladimir Proskouriakov is thereby exempt from VAT. prcd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group