ITAD Ruling No. 106-04

September 16, 2004 ITAD RULING NO. 106-04 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 New Zealand 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. 75-04 dated August 23, 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 personal use of H.E. Robert Moore-Jones, Ambassador-Extraordinary and Plenipotentiary of the New Zealand Embassy, specifically described as follows: Make: Hyundai Matrix GL 1.6 AT Model Year: 2004 Color: EB (Ebony Black) Engine Number: G4ED4877278 Chassis Number: KMHPM81CP5U179725 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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemption to the New Zealand 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 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. Hence, the sale of one (1) Hyundai Matrix GL 1.6 AT, for the personal use of the New Zealand Embassy is exempt from VAT. (BIR Ruling No. 206-93 dated May 11, 1993) CaEIST Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service