ITAD Ruling No. 051-05

June 6, 2005 ITAD RULING NO. 051-05 Sections 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention; BIR Ruling No. 34-99 Embassy of the United States of America 1201 Roxas Boulevard Manila Gentlemen : This has reference to your Note Verbale No. 0510 dated May 2, 2005 referred to this Office by the Department of Finance (DOF) and the Office of Protocol and State Visits, Department of Foreign Affairs (DFA),requesting for a tax-free purchase of one (1) locally purchased motor vehicle specifically described hereunder, for the official use of the Embassy of the United States of America: Make: Toyota Hilux Model Year: 2005 Color: Lithium Engine Number: 1KD-9362739 Chassis Number: MR0FZ29GX-01509228 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations 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" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value-added tax (VAT) on its local purchases 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, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of the United States of America and/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 May 25, 2005 that your Government allows similar exemption to the Philippine Embassy and/or its personnel on their purchases of goods and services in your country. DcITaC Hence, the herein local purchase of one (1) Toyota Hilux, for the official use of the Embassy of the United States of America is exempt from VAT. (BIR Ruling No. DA-ITAD-34-99 dated October 18, 1999. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service