ITAD Ruling No. 008-02

January 25, 2002 ITAD RULING NO. 008-02 Sections 106, 108 & 149 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD 58-01 Embassy of Australia 1st Floor, Doa Salustiana Dee Ty Tower 104 Paseo de Roxas Makati City Gentlemen : This has reference to your letter dated January 7, 2002 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem tax on a locally purchased car specifically described hereunder, for the official use of the Embassy of Australia: Make: Toyota Camry GXE 2,164 CC., 4 cylinder-In-Line, DOHC 16 Valve, 4-speed automatic transmission) Model Year: 2001 Model Code: SXV20L,-JEPNKM-A Chassis Number: 53SK20-07000736 Engine Number: 5S-4441040 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 value added tax (VAT) and ad valorem taxes on their 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, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. HTSIEa However, applying the principle of reciprocity, this Office may grant VAT and ad valorem tax exemption to the Embassy of Australian 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 September 4, 2001 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) Toyota Camry GXE, for the official use of the Embassy of Australia is exempt from VAT and ad valorem taxes. (BIR Ruling No. ITAD-58-01 dated July 12, 2001). Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service