ITAD Ruling No. 054-02

April 17, 2002 ITAD RULING NO. 054-02 Sec 106 & 149 of the Tax Code 1997 BIR Ruling No. ITAD-115-00 Colombo Plan Staff College Building Block C, DECS Complex Meralco Avenue Pasig City Attention: Pramod B. Shrestha Faculty Consultant Gentlemen : This refers to your letter dated August 28, 2001 which was referred to this Office by the Department of Finance (DOF) requesting for the tax free local purchase of one (1) unit Honda Civic 1.5 LX Model 1994, with Chassis No. PHSY61A1310 and Engine No. PH152001327 for the personal use of Mr. Pramod B. Shrestha, Faculty Consultant of Colombo Plan Staff College for Technician Education (CPSC). In reply, please be informed that Article VII, Section 2(b) of the Memorandum of Agreement between the Government of the Philippines and the Colombo Plan Staff College entered into 1987 stated the following: "ARTICLE VII" "Immunities and Privileges" "Section 2. Officers, faculty and staff of the College except Filipino nationals shall enjoy, within or with respect to the Philippines, the following privileges and immunities: "xxx xxx xxx" "b) Exemption from payment of customs duties, travel tax when on official business, and internal revenue taxes on furniture and personal effects, including one motor vehicle, imported by staff members of the College within six (6) months from the time of their taking up posts in the Philippines. However, if such motor vehicle is sold within three (3) years from the date of importation thereof to a non-exempt buyer, the staff member who sold the same shall be liable to the taxes and duties thereon; "xxx xxx xxx" It is evident that the intention of the foregoing provisions is to place the aforementioned officer of the CPSC at par with the officers of other international organizations insofar as exemption from taxes is concerned. One such organization is the Asian Development Bank whose officers are granted exemption from value-added tax (VAT) and ad valorem tax on their local purchase of motor vehicles pursuant to Memorandum of the Executive Secretary to the Secretary of Foreign Affairs and Secretary of Finance dated August 15, 1973 as implemented by Department Order No. 43-89. (BIR Ruling No. ITAD-115-00 dated August 29, 2000) Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with the precedent rulings granting VAT and ad valorem tax exemption to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request on behalf of Mr. Shrestha, Faculty Consultant of Colombo Plan Staff College for Technician Education, for exemption from VAT and ad valorem tax imposed under Sections 106(A) and 149 of the 1997 Tax Code on his purchase of one (1) unit Honda Civic 1.5 LX is hereby granted. HTDAac Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service