ITAD Ruling No. 009-02

January 25, 2002 ITAD RULING NO. 009-02 Sec. 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of Mexico Essensa East Forbes 21st Drive corner 5th Ave. Fort Bonifacio, Taguig City Attention: Mr. Carlos Angel Torres Garcia First Secretary & Deputy Chief of Mission Gentlemen : This has reference to your letter dated October 19, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) on a locally purchased car, one (1) unit of 2001 Toyota Echo/Verso, for the personal use of Mr. Carlos Angel Torres Garcia, First Secretary & Deputy Chief of Mission of the Embassy of Mexico specifically described as follows: Make: Toyota Echo/Verso Model Year: 2001 Chassis Number: JTDKT2338-00036228 Engine Number: 1NZ-AO56306 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) 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 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemption to the Embassy of Mexico 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) Toyota Echo/Verso, for the personal use of Mr. Carlos Angel Torres Garcia, First Secretary & Deputy Chief of Mission of the Embassy of Mexico is exempt from value-added tax (VAT). (BIR Ruling No. 206-93 dated May 11, 1993) acIHDA Very truly yours, (SGD. MILAGROS V. REGALADO Assistant Commissioner Legal Service