ITAD Ruling No. 009-05

February 16, 2005 ITAD RULING NO. 009-05 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 43-99 Embassy of the Republic of South Africa Suite 1, c/o Oakwood Premier Suites Ayala Center, Makati City Gentlemen : This has reference to your Note Verbale No. Phil/08/05 dated February 7, 2005 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a tax-free purchase of one (1) locally purchased motor vehicle specifically described hereunder, for the personal use of Mr. Pierre M. de Villiers, First Secretary Administration of the Embassy of the Republic of South Africa: Make: ISUZU CROSSWIND XUVi AT Model Year: 2005 Chassis No.: PABTBR54F42028068 Engine No.: 4JA1-CF7207 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 goods or 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 value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. EIDaAH However, applying the principle of reciprocity, this Office may grant VAT exemptions to the Embassy of the Republic of South Africa 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 January 19, 2005 that your Government allows similar exemption to Philippine Embassy and its personnel on their purchases of goods and services in your country. Hence, the herein local purchase of one (1) 2005 ISUZU CROSSWIND XUVi AT for the personal use Mr. Pierre M. de Villiers is exempt from VAT. (BIR Ruling No. DA-ITAD-34-99 dated October 18, 1999) Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group