ITAD Ruling No. 076-00

June 23, 2000 ITAD RULING NO. 076-00 Sec. 106 Sec. 108 249-99 Embassy of the Czech Republic 1267 Acacia Road, Dasmarias Village Makati City Attention: H . E . Stanislav Slavicky Ambassador Gentlemen : This pertains to your Note No. 00/057 dated May 5, 2000 which was referred to this Office by the Department of Foreign Affairs, requesting for a tax free local purchase of one (1) unit Opel Vectra 2.0 Wagon Model 2000, star silver color, for the official use 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 prcd xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value-added tax (VAT) on their local purchases of goods and services. In other words, purchases by the Embassy of goods and services shall be subject to VAT prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant VAT exemption to the Embassy of the Czech Republic and its personnel on their local purchases of goods and services, it appearing from the list submitted by the Department of Foreign Affairs dated June 2, 2000 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) unit Opel Vectra 2.0 Wagon Model 2000, for the official use of the Embassy is exempt from VAT. (BIR Ruling 249-99 dated April 23, 1999) Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group