ITAD Ruling No. 051-02

April 15, 2002 ITAD RULING NO. 051-02 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-36-00 Embassy of the Republic of Italy 6th Floor, Zeta Building, 191 Salcedo Street, Makati City Attention: Ms. Clementina Principe Attach for Consular Affaires Gentlemen : This has reference to your Indorsement letter dated February 6, 2002 referred to this Office by the Department of Foreign Affairs, Office of Protocol, requesting for exemption from payment of value added tax (VAT) and ad valorem tax on the local purchase of one (1) Ford Explorer specifically described as follows: Type of Use: Personal Make: Ford Explorer Model Year: 2001 Chassis Number: 1FMZU77E91UC96427 Engine Number: 1UC96427 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, both 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 Republic of Italy 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 September 4, 2001 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) Ford Explorer for the personal use of Ms. Clementina Principe, Attach for Consular Affaires of the Embassy of the Republic of Italy is exempt from VAT and ad valorem taxes. (BIR Ruling No. 36-00 dated February 4, 2000) cSIACD Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service