ITAD Ruling No. 036-00

February 4, 2000 ITAD RULING NO. 036-00 Sec. 106 Sec. 108 ITAD #12-99 333-92 Embassy of Italy 6/F Zeta Building, 191 Salcedo Street, Legaspi Village, Makati City Attention: H . E . ANDREAS FERRARESE Charge' d'Affaires a . i . Gentlemen : This refers to your letter dated October 4, 1999 requesting for a tax-free local purchase of one (1) unit TOYOTA TAMARAW FX REVO DLX; 1999 Model, 2,400 cc, 4 cylinder, Model LS80L-GRMRSM, color white for the official use of the Embassy of Italy. prcd 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) 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 Embassy of Italy 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) unit TOYOTA TAMARAW FX REVO DLX, for the official use of the Embassy of Italy is exempt from VAT and ad valorem taxes. (BIR Memo dated June 19, 1994; ITAD Ruling 12-99 dated July 26, 1999; BIR Ruling 333-92 dated October 27, 1992) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group