ITAD Ruling No. 090-01

October 18, 2001 ITAD RULING NO. 090-01 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD 53-01 French Embassy FRENCH EMBASSY / TRADE COMMISSION Poste d'Expansion Economique 34 A & B Rufino Tower 6784 Ayala Avenue, Makati City Gentlemen : This has reference to your letter dated September 25, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for the exemption from value-added tax (VAT) and ad valorem tax for a locally purchased car, one (1) unit of 2001 Honda CRV 2.0 M/T for the official use of the French Embassy specifically described as follows: Type of use: Official Make: Honda CRV 2.0 M/T (5 door sedan, gas 2.0li., PGM-FI, 5-speed manual transmission, 150 hp) Model year: 2001 Color: Taffeta White Chassis Number: PADRD 17201V303088 Engine Number: PEWD2-1403099 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 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 taxes 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT and ad valorem tax 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 as of September 4, 2001 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) Honda CRV 2.0 M/T, for the official use of the French Embassy is exempt from VAT and ad valorem taxes. (BIR Ruling No. ITAD-53-01) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service