ITAD Ruling No. 020-05

May 12, 2005 ITAD RULING NO. 020-05 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 95-00 Embassy of France 16th Floor, The Pacific Star Bldg Makati Avenue corner Sen. Gil Puyat Extension Makati City Attention: Mr. Alain Fortin First Secretary Gentlemen : This has reference to your Note Verbale No. 122/DTX dated December 13, 2004 referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits, Department of Foreign Affairs (DFA), requesting for a tax-free purchase of one (1) locally purchased motor vehicle specifically described hereunder, for the personal use of Mr. Alain Fortin, First Secretary of the Embassy of France: Make: Honda CRV 2.0 MT Model Year: 2004 Color: S Blue Engine Number: PRLD34-4200247 Chassis Number: PADRD47404V200266 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 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of France 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 January 19, 2005 and DFA Note No. 043109 1 dated December 15, 2004 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. cDSAEI Hence, the herein local purchase of one (1) Honda CRV 2.0 MT, for the personal use of Mr. Alain Fortin, First Secretary of the Embassy of France is exempt from VAT. (BIR Ruling No. DA-ITAD-95-00 dated August 1, 2000) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service Footnotes 1. DFA Note No. 043109 dated December 15, 2004 referring to the Embassy of France's Note No. 107/DTX dated November 2004 citing the 1997 Manual on Immunities & Privileges, particularly par. I(a) thereof which states "Exemption on Value-Added Tax on vehicles-Diplomats can import their personal motor vehicle which is exempt from taxes and duties or avail of purchasing a tax-free (appropriate taxes) locally-assembled personal motor vehicle from the local dealers. Technical & Administrative staff can likewise avail of the exemption if they import/purchase their personal motor vehicle within six months from date of arrival."