ITAD Ruling No. 010-03

January 17, 2003 ITAD RULING NO. 010-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of Italy 6th Floor, Zeta II Building 191 Salcedo St., Legaspi Village Makati City Attention: H.E. Umberto Colesanti Ambassador Gentlemen : This has reference to your letter dated November 14, 2002, referred to this Office by the Department of Foreign Affairs (DFA) and the Department of Finance (DOF), requesting for exemption from payment of value-added tax (VAT) on a locally purchased car specifically described hereunder, for the personal use of Mr. Pietro Vaccini Vecchio, Administrative/Technical Staff Member of the Embassy of Italy: Make: Toyota Altis 1.6J M/T Model Year: 2002 Color: Nautica Blue Chassis Number: ZZE121-8006186 Engine Number: 3ZZ-4128191 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 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 Italy 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. DHaEAS Hence, the local purchase of one (1) Toyota Altis 1.6J M/T for the personal use of Mr. Pietro Vaccini Vecchio is exempt from value-added tax (VAT) and ad valorem tax . (BIR Ruling No. 206-93 dated May 11, 1993) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service