ITAD Ruling No. 102-05

September 19, 2005 ITAD RULING NO. 102-05 Sec 106 & 108 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations BIR Ruling No. DA-ITAD-5-05 Embassy of Japan 2627 Roxas Blvd., Pasay City, Manila Attention: Mr. Nobuhiro Watanabe First Secretary Gentlemen : This has reference to your Note Verbale No. 332-05 dated June 21, 2005 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for a refund of value-added tax (VAT) on the local purchase of a motor vehicle, for the personal use of Mr. Nobuhiro Watanabe, First Secretary of the Embassy of Japan, specifically described as follows: chassis Number: Personal Make: Toyota Corolla Altis 1.8E A/T Model Year: 2005 Chassis Number: ZZE122-9003487 Engine Number: 1ZZ-4399590 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations 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 Thus, 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 and its diplomatic agents of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997. cIaHDA However, applying the principle of reciprocity, this Office may grant exemption to the Embassy of Japan and 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 June 3, 2005 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) unit of 2005 Toyota Altis 1.8E A/T, for the personal use of Mr. Nobuhiro Watanabe of the Embassy of Japan is exempt from VAT. (BIR Ruling No. DA-ITAD-5-05 dated January 21, 2005) aIDHET This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether Mr. Nobuhiro Watanabe of the Embassy of Japan is entitled to VAT exemption on the basis of reciprocity. The determination on whether your request for tax refund should be given due course is upon the Office which will be conducting the investigation for that purpose. Thus, the docket pertaining thereto (including a copy of this ruling) shall be endorsed to the proper office for processing and investigation. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service