ITAD Ruling No. 017-02

February 1, 2002 ITAD RULING NO. 017-02 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-3135-00 Embassy of Malaysia 107 Tordesillas Street Salcedo Village P.O. Box 2984 (MCPO) Makati City Attention: Mr. Abdul Aziz Shahar Second Secretary (Administration/Finance/Protocol) Gentlemen : This has reference to your letter dated October 11, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value added tax (VAT) and ad valorem tax on the sale of a personally-owned motor vehicle, for the personal use of Mr. Abdul Aziz Shahar, Second Secretary (Administration/Finance/Protocol) of the Embassy of Malaysia of one (.1) 1998 Honda CRV specifically described as follows: Make: Honda CRV Model year: 1998 Chassis Number: PEWD7P101177 Engine Number: PADRD1830WV001188 Plate No.: DC 3701 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 the goods and service; "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value added tax (VAT) and ad valorem taxes 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT and ad valorem tax exemption to the Embassy of Malaysia or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs as of September 4, 2001 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the sale of one (1) Honda CRV, for the personal use of Mr. Abdul Aziz Shahar, Second Secretary (Administrative/Finance/Protocol) of the Embassy of Malaysia is exempt from VAT and ad valorem. (BIR Ruling No. ITAD-135-00 dated February 4, 2000) ISAaTH Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service