ITAD Ruling No. 063-00

March 31, 2000 ITAD RULING NO. 063-00 Section 106 Section 108 ITAD # 10-00; 34-99; 3-99 Embassy of Malaysia 107 Tordesillas Street, Salcedo Village, Makati City Gentlemen : This refers to your Note No. BY 27/2000 dated February 10, 2000, which was referred to this Office by the Department of Foreign Affairs (DFA), requesting for tax exemption on the purchase of one (1) unit Honda CRV 2.0 A/T, 1998 Model with Engine No. PEWD7-P101177 and Chassis No. PADRD-1830WV001188 from International Center for Living Aquatic Resources Management Inc., (ICLARM), for the personal use of His Excellency M. H. Arshad, Ambassador of Malaysia to the Philippines. In reply, please be informed that pursuant to Article 34 of the Vienna Convention On Diplomatic Relations, pertinent portions of which read: "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 tax 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(A) and 108, and the ad valorem tax under Section 149, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of Malaysia or its personnel on their local purchases of goods and/or services it appearing from the lists submitted by the DFA (dated October 4, 1999 and June 15, 1994) that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. (ITAD No. 10-00 dated January 19, 2000) Hence, the purchase of one (1) unit Honda CRV 2.0 A/T, 2000 Model from ICLARM for the personal use of His Excellency M. H. Arshad, Ambassador of Malaysia to the Philippines, is exempt from value-added and ad valorem taxes. (ITAD 34-99; 3-99) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group