ITAD Ruling No. 066-03

May 2, 2003 ITAD RULING NO. 066-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-135-00 Embassy Of Malaysia 107 Tordesillas Street Salcedo Village P.O. Box 2948 (MCPO) Makati City Gentlemen : This has reference to your letter dated June 10, 2002 referred to this Office by the Department of Foreign Affairs (DFA) and the Department of Finance, requesting for exemption from payment of value added tax (VAT) on the local purchase of a motor vehicle, for the official use of the Consulate General of Malaysia in Davao City, of one (1) 2002 Mitsubishi Adventure Super Sport, specifically described as follows: Make: Mitsubishi Adventure Super Sport Model year: 2002 Chassis Number: PAEVB2WLR2B002531 Engine Number: 4G63A-B8653 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 goods or services; "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value added tax (VAT) 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, both of the National Internal Revenue Code of 1997. However, applying 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 list submitted by the Department of Foreign Affairs as of September 4, 2001 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the sale of one (1) 2002 Mitsubishi Adventure Super Sport, for the official use of the Consulate General of Malaysia in Davao City, is exempt from VAT. ( BIR Ruling No. ITAD-135-00 dated February 4, 2000 ) ICDSca Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service