ITAD Ruling No. 064-05

June 28, 2005 ITAD RULING NO. 064-05 Sec 106 & 108, Sec 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations BIR Ruling No. ITAD-46-05 Embassy of Australia Level 23, Tower 2, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil Puyat Ave., Makati City Attention: Ms. Fely Dominique Euros Bowen Third Secretary Gentlemen : This has reference to your Note No. 155/05 and File No. MN94/00109 dated May 31, 2005 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from payment of ad valorem and value-added taxes (VAT) on the purchase of one (1) unit 2005 Honda CRV 2.4 4X2 A/T for the personal use of Ms. Fely Dominique Euros Bowen, Third Secretary of the Embassy of Australia, described as follows: Make: Honda CRV 2.4 4X2 A/T Model Year: 2005 Color: Shoreline Mist Frame Number: PADRD78505V300125 Engine Number: RRMD55-5300130 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: "ARTICLES 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 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 and 108, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant the exemptions 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 as of June 3, 2005, that your Government allows similar exemptions to the Philippine Embassy and its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) unit of 2005 Honda CRV 2.4 4X2 A/T for the personal use of Ms. Fely Dominique Euros Bowen, Third Secretary of the Embassy of Australia is exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD 46-05 dated May 25, 2005) Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service