ITAD Ruling No. 004-99

July 8, 1999 ITAD RULING NO. 004-99 Section 106 (A) Section 108 Section 149 DA 177-99 British Embassy 17/F Locsin Bldg., 6752 Ayala Avenue, Makati City Attention: Mr . A R M Dent Management Officer Gentlemen : This refers to your Note No. 61-99 dated May 26, 1999, requesting for exemption from value-added tax (VAT) and ad valorem tax on the purchase of one (1) unit Honda City 1.3 A/T, 1999 Model with Engine No. P3RD6-P200933 and Chassis No. PAD3A 1640WV000954 for the personal use of Mr. Michael Delaney, Third Secretary Immigration of the British Embassy, Manila. 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 (A) and 108 and ad valorem tax prescribed under Section 149 of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the British Embassy 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 purchases of goods and services in your country. (BIR VAT Ruling No. DA-177-99) Such being the case, the local purchase of one (1) unit 1999 Honda City 1.3 A/T for the personal use of Mr. Michael Delaney, Third Secretary Immigration of the British Embassy, Manila is exempt from the value-added tax and ad valorem tax. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group