ITAD Ruling No. 050-00

February 24, 2000 ITAD RULING NO. 050-00 Sec. 106 Sec. 108 333-92 ITAD 34-99 Embassy of the United States of America Metro Manila, Philippines Attention: Mr . Jonathan M . Perrezous Third Secretary Gentlemen : This refers to your letter dated November 23 1999, requesting for exemption from value-added tax (VAT) on the purchase of one (1) unit of 1993 MAZDA PROTG 4dr Sedan, for the personal use of Jonathan M. Perrezous, Third Secretary, Embassy of the United States of America. 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; prcd 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, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of the United States of America 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) unit of 1993 MAZDA PROTG 4dr Sedan, for the personal use of Mr. Jonathan M. Perrezous is exempt from VAT and ad valorem taxes. (BIR Memo dated June 19, 1994; BIR Ruling 333-92 dated October 27, 1992) prcd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group