ITAD Ruling No. 023-99

August 30, 1999 ITAD RULING NO. 023-99 Section 106 (A) Section 108 DA 330-99 The Canadian Embassy 9th and 11th Floors, Allied Bank Centre 6754 Gentlemen : This refers to your Note No. 132/99 dated June 18, 1999, requesting for exemption from value-added tax (VAT) on the purchase of one (1) unit mist silver HONDA CR-V, 1999 Model with Engine No. PEWD2-P101019 and Chassis No. PADRD1720WV001020 for the official use of the Socio-Economic Development Through Cooperatives in the Philippines (SEDCOP) of the Canadian International Development Agency (CIDA), Embassy of Canada. 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 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 (A) and 108 both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the Canadian Embassy 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 personnel on their purchases of goods and services in your country. Such being the case, the local purchase of one (1) unit 1999 HONDA CR-V, for the official use of the Socio-Economic Development Through Cooperatives in the Philippines, Canadian Embassy is exempt from the value-added tax. cdlex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group