ITAD Ruling No. 037-04

April 20, 2004 ITAD RULING NO. 037-04 Sec 106, 108 & 149 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-72-00 Embassy of Korea 10th Floor, The Pacific Star Bldg. Makati Avenue Makati City Attention: Mr. Hwang Hyeon-Gyu Deputy Executive Director of Korea Trade Center (KOTRA) Gentlemen : This has reference to your Note Verbale No. KPH 2004-078 dated March 3, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for exemption from payment of ad valorem tax and value-added tax (VAT) on one (1) motor vehicle specifically described hereunder, for the personal use of Mr. Hwang Hyeon-Gyu, Deputy Executive Director of Korea Trade Center (KOTRA): Make: Toyota Altis 1.8E A/T Model Year: 2004 Color: Flaxen Metallic Chassis Number: ZZE1229002310 Engine Number: 1ZZ4282953 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 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 exemptions to the Embassy of the Republic of Korea 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 its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) Toyota Corolla Altis 1.8E A/T for the personal use of Mr. Hwang Hyeon-Gyu, Deputy Executive Director, Korea Trade Center-Manila (KOTRA) is exempt from VAT and ad valorem taxes. ( BIR Ruling No. DA-ITAD-72-02 dated May 18, 2000 ) DcITHE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service