ITAD Ruling No. 027-03

February 3, 2003 ITAD RULING NO. 027-03 Sec. 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of Japan 2627 Roxas Boulevard, Pasay City Attention: Mr. Yoshihide Onoda Third Secretary Gentlemen : This has reference to your letter dated December 19, 2002 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem tax on a locally purchased car specifically described hereunder, for the personal use of Mr. Yoshihide Onoda, Third Secretary of the Embassy of Japan: Make: Toyota Camry 2.4 V A/T Model Year: 2002 Color: Quick Silver Chassis Number: ACV30-9000314 Engine Number: 2AZ-0964663 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) 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, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Japan 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 purchase of goods and services in your country. Hence, the local purchase of one (1) Toyota Camry 2.4, V A/T for the personal use of Mr. Yoshihide Onoda is exempt from VAT and ad valorem taxes. ( BIR Ruling No. 206-93 dated May 11, 1993 ) AHCaED Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service