ITAD Ruling No. 034-00

February 3, 2000 ITAD RULING NO. 034-00 Section 106 (A) Section 108 Section 149; BIR RULING-333-99; DA-177-99; ITAD-3-99 ITAD-34-99 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: Mr . Sergei Y . Sorokin Gentlemen : This refers to your letter dated December 20, 1999 indorsed by the Department of Foreign Affairs (DFA) requesting for exemption from payment of taxes on the purchase of one (1) unit of locally purchased 1999 Honda CRV 2,0 A/T (5 door sedan, gas, 2.0lt., PGM-F1, 5-speed automatic transmission, 150 hp) with Condi. St. No. 01 TBL, engine no. PEWD7-P204694, Frame No. PADRD 1830XV104687, and color Heather Mist Silver for the official use of the Embassy of the Russian Federation. 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 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 Section 106 (A) and 108 and ad valorem tax prescribed under the National Internal Revenue Code of 1977. However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of the Russian Federation 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 purchase of goods and services in your country. (BIR Ruling 333-92; VAT Ruling No. DA-177-99; ITAD Ruling 3-99; 34-99) cdlex Such being the case, the local purchase of one (1) Honda CRV 2,0 A/T, for the use of the Embassy of the Russian Federation is exempt from value added tax and ad valorem tax. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group