ITAD Ruling No. 070-00

April 26, 2000 ITAD RULING NO. 070-00 Sec. 106 Sec. 108 Sec. 149 BIR-ITAD 64-00 Embassy of the Republic of Turkey 2268 Paraiso St., Dasmarias Village Makati City Attention: Ms . Beste Pehlivan Third Secretary Gentlemen : This pertains to your Note No. 2000/6 dated January 25, 2000 which was referred to this Office by the Department of Foreign Affairs, requesting for a tax free local purchase of one (1) unit Honda City Model 2000, 1.3 LXi M/T, 4-door sedan, 1.3 liter gas, PGM-FI, 5-speed manual transmission, 95 h.p., Cond. St. No. 66 TND, Engine No. P3RD1-P302240, Frame No. PAD3A1530XV102275, kaiser silver color, for the personal use of Ms. Beste Pehlivan, Third Secretary of the Embassy. 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 their local purchases of goods and services. In other words, purchases made by the Embassy and its personnel of goods and services shall be subject to VAT prescribed under Sections 106 and 108, and ad valorem tax under Section 149, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity and based on the favorable recommendations by the Department of Foreign Affairs and the Philippine Embassy in Turkey respectively dated April 14, 2000 and March 1, 2000, this Office may grant VAT and ad valorem tax exemption to the Embassy of the Republic of Turkey and its personnel on their local purchases of goods and services. Hence, the local purchase of one (1) unit Honda City Model 2000, 1.3 LXi M/T, for the personal use of Ms. Beste Pehlivan, Third Secretary of the Embassy, is exempt from VAT and ad valorem tax. (ITAD Ruling 64-00 dated April 6, 2000) cdlex Very truly yours, (SGD.) DAKILA B. FONACIER Undersecretary of Finance Commissioner of Internal Revenue