ITAD Ruling No. 012-04

February 18, 2004 ITAD RULING NO. 012-04 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-97-00 Embassy of Finland 21st Floor, BPI Buendia Center Sen. Gil Puyat Avenue Makati City Attention: Ms. Mervi Kultamaa Second Secretary Gentlemen : This has reference to your Note No. 680 dated January 7, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs, (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem tax on one (1) motor vehicle specifically described hereunder, for the personal use of Mr. Mervi Kultamaa, Second Secretary of the Embassy of Finland: Make: Honda City 1.3 A MT Model Year: 2003 Color: Taffeta White Chassis Number: MRHGD65603P010181 Motor Number: L13A31800659 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which reads: SECHIA "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 age 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, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Finland 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) Honda City 1.3 A MT for the personal use of Ms. Mervi Kultamaa, Second Secretary of the Embassy of Finland is exempt from VAT and ad valorem taxes. (BIR Ruling No. DA-ITAD-97-00 dated August 2, 2000) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service