ITAD Ruling No. 011-99

July 26, 1999 ITAD RULING NO. 011-99 Section 106 Section 108 206-93 Embassy of the Russian Federation Makati City, Philippines Attention: Mr . Vladimir Brusentsev Attache Gentlemen : This refers to your letter dated May 18, 1999, requesting for exemption from value added tax (VAT) on the purchase of one (1) unit Honda City 1.3 LXi M/T, 1999 Model with Engine No. P3RD1-P201153 and Chassis No. PAD3A 1530WV001142 for the personal use of Mr. Vladimir Brusentsev, Attache, Embassy of the Russia Federation. cdll In reply, please be informed that pursuant to Article 43 of the Vienna Convention On Diplomatic Relations, pertinent portions 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, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of the Russian Federation 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 (BIR Ruling No. 206-93 dated May 11, 1993). cdll Hence, the local purchase of one (1) Honda City 1.3 LXi 1999 Model, for the personal use of Mr. Vladimir Brusentsev is exempt from VAT. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group