ITAD Ruling No. 035-05

April 20, 2005 ITAD RULING NO. 035-05 Sec 106 & 108 of the Tax Code 1997 Article 34, Vienna Convention BIR Ruling No. DA-ITAD-124-03 Royal Thai Embassy 107 Rada St., Legaspi Village Makati City Attention: Mr. Chailert Limsomboon Minister Counsellor Gentlemen : This has reference to your Note No. 40001/229 dated March 3, 2005 referred to this Office by the Department of Finance (DOF) and Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem taxes on a locally purchased car specifically described hereunder, for the personal use of Mr. Chailert Limsomboon, Minister Counsellor of the Royal Thai Embassy: Make: Ford Escape 4x2 2.3A/T Model Year: 2005 Chassis Number: PE2ET67151WA00845 Engine Number: L3626646 In reply, please be informed that pursuant to Article 34 of the 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 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 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 VAT and ad valorem tax exemption to the Royal Thai 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 the Philippine Embassy and/or its personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) 2005 Ford Escape 4x2 2.3L A/T for the personal use of Mr. Chailert Limsomboon is exempt from VAT and ad valorem taxes. (BIR Ruling No. DA-ITAD-124-03 dated August 11, 2003) EcASIC Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group