ITAD Ruling No. 107-03

July 29, 2003 ITAD RULING NO. 107-03 Sec 108 & 109 of the Tax Code of 1997; Article 34, Vienna Convention BIR Ruling ITAD-24-01 Australian Embassy Salustiana Tower, 104 Paseo de 5 Legaspi Village, Makati City Gentlemen : This has reference to your Note No. 226/03 dated June 11, 2003 referred to this Office by the Department of Foreign Affairs, Office of Protocol, requesting for exemption from payment of ad valorem tax and value added tax (VAT) on the local purchase of one (1) Toyota Camry 2.0G A/T specifically described as follows: Type of Use: Official Make: Toyota Camry 2.0G A/T Model Year: 2003 Chassis Number: ACV31-9000711 Engine Number: 1AZ-1126281 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) 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 208, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. IHcTDA However, applying the principle of reciprocity, this Office may grant VAT and ad valorem tax exemption to the Australian 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 purchases of goods and services in your country. Hence, the local purchase of one (1) Toyota Camry 2.0G A/T for the official use of the Australian Embassy is exempt from VAT and ad valorem taxes. ( BIR Ruling No. ITAD-24-01 dated March 12, 2001 ) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service