ITAD Ruling No. 031-05

April 13, 2005 ITAD RULING NO. 031-05 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-102-04 Embassy of Australia 16F 2627 Roxas Boulevard Pasay City Attention: Mr. Christopher Robin Kenyon First Secretary Gentlemen : This has reference to your Note No. 081/05 dated March 8, 2005 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) on one (1) unit 2005 Ford Everest 4x4 A/T for the personal use of Mr. Christopher Robin Kenyon, First Secretary of the Embassy of Australia: Make: Ford Everest 4x4 A/T Model Year: 2005 Color: Cool White Frame Number: MNCLS4D405W110766 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: THaAEC "(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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Australia 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 and its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) 2005 Ford Everest 4X4 A/T for the personal use of Mr. Christopher Robin Kenyon is exempt from VAT. (BIR Ruling No. ITAD-102-04 dated September 13, 2004) Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group