ITAD Ruling No. 049-03

March 28, 2003 ITAD RULING NO. 049-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. DA-ITAD-27-03 Japan Bank For International Cooperation 31/F Citibank Tower, Valero St., cor. Villar St. Salcedo Village, Makati City Attention: Ms. Mayumi Endo Representative of Japan Bank for International Cooperation (JBIC) Gentlemen : This has reference to your letter dated January 29, 2003 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) on the local purchase of a motor vehicle specifically described hereunder, for the personal use of Ms. Mayumi Endo, Representative of Japan Bank for International Cooperation (JBIC): Make: Honda CRV 2.0 A/T Model Year: 2003 Color: Satin Silver Chassis Number: PADRD48302V005138 Engine Number: PRLD83-2005152 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 goods or 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, on the basis of the favorable recommendation of the Department of Foreign Affairs and the Department of Finance and in line with the precedent rulings granting VAT exemption to personnel and members of the diplomatic missions on the local purchase of motor vehicles, your request on behalf of Ms. Mayumi Endo, Representative of Japan Bank for International Cooperation (JBIC), for exemption from VAT imposed under Sections 106(A) of the 1997 Tax Code on her purchase of one (1) unit Honda CRV is hereby granted. Hence, the local purchase of one (1) Honda CRV 2.0 for the personal use of Ms. Mayumi Endo is exempt from VAT. EScAHT Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service