ITAD Ruling No. 083-04

August 5, 2004 ITAD RULING NO. 083-04 Sec 108, 109 & 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 119-02 Embassy of the Socialist Republic of Vietnam 670 Pablo Ocampo Street Malate, Manila Gentlemen : This has reference to your Note No. 89 VN/2004 dated July 14, 2004 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 and ad valorem taxes on a locally purchased motor vehicle for the official use of the Embassy of the Socialist Republic of Vietnam, specifically described as follows: Make: Toyota Camry 2.0E A/T Model Year: 2004 Color: Extreme Black Engine No.: 1AZ-1459443 Chassis No.: ACV31-9001442 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 the Socialist Republic of Vietnam 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) Toyota Camry A/T for the official use of the Embassy of the Socialist Republic of Vietnam is exempt from VAT and ad valorem taxes. ( BIR Ruling No. 119-02 dated July 1, 2002 ) EHIcaT Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service