ITAD Ruling No. 103-04

September 13, 2004 ITAD RULING NO. 103-04 Sec 106, 108 & 149 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 79-04 Australian Embassy 23/F RCBC Plaza Bldg., Ayala Avenue, cor. H.V. dela Costa St., Makati City Gentlemen : This has reference to your Note Verbale No. 229/04 dated August 13, 2004 referred to this Office by the Department of Foreign Affairs and the Department of Finance (DFA), requesting for the exemption from the payment of value-added tax (VAT) and ad valorem taxes on a locally-purchased motor vehicle for the official use the Embassy of Australia (AusAID Section), specifically described as follows: Make: Toyota Camry 2.4V A/T Model Year: 2004 Color: Quick Silver Engine Number: 2AZ-1497813 Chassis Number: ACV30-9001087 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 as of October 29, 2004 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchases of goods and services in your country. AHCTEa Hence, the sale of one (1) Toyota Camry 2.4V A/T, for the official use of the Embassy of Australia (AusAID) is exempt from VAT and ad valorem taxes. ( BIR Ruling No. 79-04 dated August 5, 2004 ) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service