ITAD Ruling No. 038-05

April 28, 2005 ITAD RULING NO. 038-05 Sections 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-039-01 Royal Netherlands Embassy 9th Floor, King's Court Building 2129 Don Chino Roces Ave. Makati City Attention: Mr. Sander Henricus Gerardus Jacobs Assistant Attach Gentlemen : This has reference to your Note Verbale No. MAN/CZ dated March 28, 2005 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs, Office of Protocol, requesting for exemption from payment of value-added tax (VAT) on a locally purchased car specifically described hereunder, for the personal use of Mr. Sander Henricus Gerardus Jacobs, Assistant Attach of the Royal Netherlands Embassy: Make: Toyota RAV 4 A/T 2.0 GAS Model Year: 2005 Color: Graphite Chassis Number: JTEHH20UX-06128631 Engine Number: IAZ-1725307 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Royal Netherlands 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 as of January 19, 2005 that your Government allows similar exemption to Philippine Embassy and/or its personnel on their purchase of goods and services in your country. EIDATc Hence, the local purchase of one (1) Toyota RAV 4 A/T 2.0 GAS, for the personal use of Mr. Sander Henricus Gerardus Jacobs, Assistant Attach of the Royal Netherlands Embassy is exempt from VAT and ad valorem taxes. (BIR Ruling No. ITAD-039-01 dated April 5, 2001) Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group