ITAD Ruling No. 069-03

May 6, 2003 ITAD RULING NO. 069-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 95-00 Embassy Of France 16/F Pacific Star Bldg. Sen. Gil Puyat cor. Makati Avenue Makati City Gentlemen : This has reference to your Note No. 28/DTX dated March 26, 2003 referred to this Office by the Immunities and Privileges Division, Office of Protocol of the Department of Foreign Affairs (DFA), requesting for exemption from payment of VAT on a locally purchased motor vehicle specifically described hereunder, for official use of the French Embassy: Make: Honda CRV 2.0 M/T Model Year: 2003 Color: Monte Carlo Red Chassis Number: PADRD47203V103777 Engine Number: PRLD32-3103803 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 exemption to the French Embassy 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. Hence, the sale of one (1) 2003 Honda CRV M/T, for the official use of the French Embassy is exempt from VAT. ( BIR Ruling No. 95-00 dated August 1, 2000 ) IcHEaA Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service