ITAD Ruling No. 058-01

July 12, 2001 ITAD RULING NO. 058-01 Sec 106, Sec 108 & Sec 49, NIRC BIR Ruling No. ITAD-24-01 DA-ITAD-058-01 Embassy of Australia PO Box 1274 MCC Makati City Gentlemen : This has reference to your letter dated May 24, 2001 which was referred to this Office by the Department of Foreign Affairs (DFA), requesting for a tax-free local purchase of one (1) 2000 Toyota Camry GXE for the official use of the Embassy of Australia, specifically described as follows: Type of Use: Official Make: Toyota Camry GXE Model Year: 2000 Color: Freedom Beige Chassis Number: 53SK20-07000405 Engine Number: 5S-4325167 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 their 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 tax exemption to the Embassy of Australia 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. EaScHT Hence, the local purchase of one (1) Toyota Camry GXE 2000, for the official use of the Embassy of Australia, is exempt from VAT and ad valorem taxes. (BIR Ruling No. DA-ITAD 24-01 dated March 12, 2001) Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group