ITAD Ruling No. 040-00

February 9, 2000 ITAD RULING NO. 040-00 Sec. 106 Sec. 108 BIR Ruling 333-92 ITAD Ruling 34-99 The Embassy of Portugal 14D Trafalgar Plaza, Dela Costa Street Salcedo Village, Makati City, Attention: H . E . Joo Henrique Araujo Brito Camra Ambassador Gentlemen : This refers to your letter dated December 29, 1999 requesting for exemption from value added tax (VAT) on the local purchase of one (1) unit TOYOTA TAMARAW FX REVO GLX-DIESEL M/T with Chassis No. LF80-8003302 and Engine No. 2L-9568657, 1999 Model for H.E. JOO HENRIQUE ARAUJO BRITO CMARA, Ambassador of the Embassy of Portugal. 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 tax 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 Portugal 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 TAMARAW FX REVO GLX-DIESEL M/T, for the personal use of H.E. JOO HENRIQUE ARAUJO BRITO CMARA is exempt from VAT and ad valorem taxes. (BIR Memo dated June 19, 1994; BIR Ruling No. 333-92 dated October 27, 1992; ITAD Ruling No. 34-99 dated October 18, 1999) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group