ITAD Ruling No. 020-02

February 11, 2002 ITAD RULING NO. 020-02 Sec 106 (a) & 149 of the Tax Code of 1997 Sec VII, Article XII of the Agreement bet. RP and International Bank for Reconstruction and Development (The World Bank) The World Bank 23rd Floor, The Taipan Place Emerald Avenue, Ortigas Center Pasig City Attention: Vinay Bhargava Country Director, Philippines East Asia and Pacific Region Gentlemen : This has reference to your letter dated June 14, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for a tax-free local purchase of a motor vehicle, one (1) Toyota Hi-Ace GL 2.0, for the official use of The World Bank/International Bank for Reconstruction and Development, specifically described as follows: Type of use: Official Make: Toyota Hi-Ace GL 2.0 Model year: 2001 Color: Light Green Metallic Chassis Number: RZH102-6002097 Engine Number: 1RZ-2589663 In reply, please be informed that Section VII, Article XII of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank.) concerning Establishment of a Resident Mission in the Republic of the Philippines provides as follows: "VII. OFFICERS, EXPERTS AND CONSULTANTS OF THE BANK Article XII "Officers, experts, persons on secondment and consultants of the Bank assigned to perform service with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: cEAIHa "xxx xxx xxx "(h) except with respect to nationals or permanent residents of the Philippines, the right to import and re-export or sell their furniture and effects, including motor vehicles and spare parts therefor subject to payment of applicable taxes thereon if sold to and enjoying the same privileges and immunities as regards to goods, including motor fuel, purchased in the Philippines to the resident members of diplomatic and international organizations. "xxx xxx xxx "(j) all such other exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations ." It is evident that the intention of the foregoing provisions is to place the officers of the World Bank at par with the officers of other international organizations insofar as exemption from taxes is concerned. One such organization is the Asian Development Bank whose officers are granted exemption from value-added tax (VAT) on their local purchase of motor vehicles pursuant to Memorandum of the Executive Secretary to the Secretary of Foreign Affairs and Secretary of Finance dated August 15, 1973 as implemented by Department Order No. 43-89. (BIR Ruling No. ITAD-115-00 dated August 29, 2000) Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with the precedent rulings granting VAT to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request for exemption from VAT imposed under Sections 106(A) and 149 of the Tax Code of 1997 on The World Bank's local purchase of one (1) Toyota Hi-Ace GL 2.0 is hereby granted. Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service