ITAD Ruling No. 035-00

February 4, 2000 ITAD RULING NO. 035-00 Secs. 106, 108, & 149 ITAD #34-99 333-92 Canadian Embassy Ninth Floor, Allied Bank Center 6754 Ayala Avenue Makati City Attention: Mr . Ron Anderson Second Secretary and Consul Gentlemen : This refers to your letter dated January 25, 2000 requesting for a tax-free local purchase of one (1) unit Honda Accord Sedan, 2000 Model for the personal use of Mr. Ron Anderson, Second Secretary and Consul of the Canadian Embassy. 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 tax under Section 149, 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 purchase of goods and services in your country. Hence, the local purchase of one (1) Honda Accord Sedan 2000 Model, for the personal use of Mr. Ron Anderson is exempt from VAT and ad valorem taxes. (ITAD Ruling No. 34-99 dated October 18, 1999; BIR Ruling 333-92 dated October 27, 1992) cdlex Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group