ITAD Ruling No. 047-01

May 15, 2001 ITAD RULING NO. 047-01 Sec 106, Sec 108 & Sec 149 BIR Ruling No. ITAD-172-00 Embassy of the Republic of Korea 10th Floor, The Pacific Star Bldg., Makati Avenue, Makati City Attention: Mr . Soon-chun Lee Minister and Deputy Chief of Mission Gentlemen : This has reference to your letter dated March 27, 2001 referred to this Office by the Immunities and Privileges Division, Office of Protocol of the Department of Foreign Affairs (DFA), requesting for a tax-free local purchase of one (1) 2001 Honda Civic 1.6 VTi A/T specifically described as follows: Type of Use: Personal Make: Honda Civic 1.6 VTi A/T Model Year: 2001 Color: Titanium Silver Metallic Chassis Number: PADES56501V000122 Engine Number: PSJD5-1000197 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, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant tax 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 Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) Honda Civic 1.6 VTi A/T Model 2001, for the personal use of Mr. Soon-chun Lee, Minister and Deputy Chief of Mission of the Embassy of Korea is exempt from VAT and ad valorem taxes. (BIR Ruling No. 172-00 dated November 10, 2000) Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Service