ITAD Ruling No. 018-05

March 3, 2005 ITAD RULING NO. 018-05 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-43-99 Embassy of Switzerland 24/F Equitable Bank Tower 8751 Paseo de Roxas, Makati City Gentlemen : This has reference to your Note No. 88/2004 dated October 28, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for a tax-free purchase on one (1) unit of locally assembled motor vehicle for the personal use of Ms. Tania Morizzo, Consular Officer of the Embassy of Switzerland, specifically described as follows: Type of Use: Personal Make: Suzuki Jimny JLX Automatic Transmission Model Year: 2004 Color: Silver Chassis Number: JS3JB43V6-54160270 Engine Number: M13A-1461605 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 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 VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of Switzerland and/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 June 22, 2004 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. 2005cdtai Hence, the local purchase of one (1) 2004 Suzuki Jimny JLX Automatic Transmission, for the personal use of Ms. Tania Morizzo of the Embassy of Switzerland is exempt from VAT. (BIR Ruling No. ITAD-43-99 dated November 9, 1999) ScAIaT Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group