ITAD Ruling No. 079-04

August 5, 2004 ITAD RULING NO. 079-04 Sec 106, 108 & 149 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-24-01 Embassy of Australia Level 23 Tower 2, RCBC Plaza 6819 Ayala Avenue Makati City Gentlemen : This has reference to your Note No. 181/04 dated July 1, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for exemption from payment of ad valorem and value-added taxes (VAT) on a locally purchased motor vehicle for the personal use of Col. Christopher Mark Burns, Defence Attach of the Embassy of Australia, specifically described as follows: Make: Ford Escape 4X2 AT Model Year: 2004 Color: Vitro Silver Frame Number: PE2ET71141GD00780 Engine Number: YF002170 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 the 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, 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 exemption 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 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. Hence, the local purchase of one (1) Ford Escape 4X2 A/T for the personal use of Col. Christopher Mark Burns, Defence Attach of the Australian Embassy is exempt from VAT and ad valorem taxes. ( BIR Ruling No. ITAD-24-01 dated March 12, 2001 ) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service