ITAD Ruling No. 013-03

January 27, 2003 ITAD RULING NO. 013-03 Art. 109 (q) Tax Code Art. 2, Agreement Between the Rep. Of the Phils. & Intergovernmental Committee for Migration DA-ITAD 216-02 International Organization for Migration Regional Office for East and Southeast Asia Units G & H, 25th Floor Citibank Tower Condominium Paseo de Roxas, Makati City Attention: Bruce Reed Regional Representative & Director of Administration Gentlemen : This refers to your request No. Ref. C.O1.E.095 endorsed to this Office by the Department of Finance dated October 2, 2002, for exemption from the payment of value-added tax (VAT) on the locally purchased motor vehicle, a 2002 Mitsubishi Adventure SuperSport, bearing Serial No. PAEVB2WLR2B-002665 and Motor No. 4G63AB9634 for the personal use of Ms. LOUISE BELANGER, Programme Officer/Project Manager, Canadian Orientation Abroad, International Organization For Migration (IOM). In reply, Section 109(q) of the Tax Code of 1997 provides: "Sec. 109. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree Nos. 66, 529 and 1590; "xxx xxx xxx." Records show that the Government of the Republic of the Philippines entered into an agreement with the Intergovernmental Committee for Migration (presently IOM) the relevant provision of the agreement states as follows: "Article 2 1. Unless otherwise provided in this Agreement, the Committee, including its property, funds and assets, shall enjoy in the Philippines the same privileges and immunities as those granted to specialized agencies of the United Nations by virtue of the Convention on the privileges and immunities of the specialized agencies of 21 November 1947 and of Philippine laws and regulations, governmental decrees and ministerial instructions pertaining to this matter." (Emphasis supplied) DAEICc Relevant to the above, the Convention On The Privileges And Immunities Of The Specialized Agencies of the United Nations (UN Convention), provides as follows: "Section 4 "The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except in so far as in any particular case they have expressly waived their immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution." "Section 10 "While the specialized agencies will not, as a general rule, claim exemption from excise duties and from taxes on the sale of movable and immovable property which form part of the price to be paid, nevertheless when the specialized agencies are making important purchases for official use of property on which such duties and taxes have been charged or chargeable, States parties to this Convention will, whenever possible, make appropriate administrative arrangements for the remission or return of the amount of duty or tax ." (Emphasis supplied) Section 10 of the UN Convention clearly requires that to be entitled to a "possible . . . remission or return of the amount of duty or tax," the subject purchases must be for official use of the specialized agency. SECcIH Inasmuch as the herein purchase of which Ms. Louise Belanger of IOM is for her personal use , we regret to inform you that your request for exemption from VAT as above-stated is hereby denied for lack of legal basis. (DA-ITAD 216-02 dated December 20, 2002) Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service