ITAD Ruling No. 015-05

February 24, 2005 ITAD RULING NO. 015-05 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-34-99 Embassy of the United States of America Roxas Boulevard Manila Attention: Ms. Aye Aye Thwin Population Development Officer Gentlemen : This has reference to your Note Verbale No. 1148 dated October 13, 2004 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 assembled motor vehicle described hereunder, for the personal use of Ms. Aye Aye Thwin, Population Development Officer of the Embassy of United States of America: Make: Ford Everest 4X2 A/T Model Year: 2004 Color: Highlight Silver Chassis No.: MNCLS4D404W110353 Engine No.: WLAT-536794 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, both of the National Internal Revenue Code of 1997. EcDATH However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of the United States of America 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 and its personnel on their purchases of goods and services in your country. 2005cdtai Hence, the herein local purchase of one (1) locally assembled motor vehicle for the personal use of Ms. Aye Aye Thwin, Population Development Officer of the Embassy of United States of America 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