ITAD Ruling No. 039-05

May 9, 2005 ITAD RULING NO. 039-05 Sections 106, 108, 149 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-070-03 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: Mr. Alexey Mishin First Secretary Gentlemen : This has reference to your Note Verbale No. 24 dated March 30, 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 taxes on a locally purchased car specifically described hereunder, for the official use of the Embassy of the Russian Federation: Make: Toyota Camry 2.4V A/T Model Year: 2005 Color: Quick Silver Chassis Number: ACV30-9001533 Engine Number : 2AZ-1711118 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 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 Embassy of the Russian Federation 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 purchases of goods and services in your country. ATESCc Hence, the local purchase of one (1) Toyota Camry 2.4V A/T, for the official use of the Embassy of the Russian Federation is exempt from VAT and ad valorem taxes. (BIR Ruling No. ITAD-070-03 dated May 6, 2003) Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group