ITAD Ruling No. 038-01

April 5, 2001 ITAD RULING NO. 038-01 Sec 106, Sec 108 & Sec 149 BIR Ruling No. ITAD-23-99 Embassy of Canada 9th Floor, Allied Bank Center Ayala Avenue Makati City Attention: Mr . Greg Curry Counsellor and Consul Gentlemen : This has reference to your letter dated January 16, 2001 referred to this Office by the Department of Foreign Affairs (DFA),requesting for a tax-free local purchase of one (1) Toyota Hi-Ace Grandia specifically described as follows: Type of Use: Official Make: Toyota Hi-Ace Grandia Model Year: 2000 Color: Light Green Chassis Number: DC-3960 Engine Number: 5L-5044575 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 their 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Canada 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) Toyota Hi-Ace Grandia, for the official use of the Embassy of Canada is exempt from VAT; and ad valorem taxes. (BIR Ruling No. 95-00 dated August 1, 2000) Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Service