ITAD Ruling No. 107-04

September 22, 2004 ITAD RULING NO. 107-04 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 27-03 Embassy of Japan Consular Office of Japan 7th Floor, Keppel Center Samar Loop, Cebu City, Cebu Attention: Mr . Shingo Inao Second Secretary Gentlemen : This has reference to your Note Verbale No. 399-04 dated August 5, 2004 referred to this Office by the Department of Foreign Affairs and the Department of Finance (DFA), requesting for the refund of value-added tax (VAT) paid on a locally purchased motor vehicle for the personal use of Mr. Shingo Inao, Second Secretary of the Embassy of Japan, specifically described as follows: Make: Toyota Revo/VX LTR 2.0 4S Model Year: 2004 Color: Ico Lithium Production Number: 186-06 Engine Number: 1RZ-3299773 Frame Number: RZF82-0005232 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 exemptions to the Embassy of Japan 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 Philippine Embassy personnel on their purchases of goods and services in your country. Hence, the sale of one (1) Toyota Revo/VX LTR 2.0 4S, for the personal use of Mr. Shingo Inao, Second Secretary of the Embassy of Japan is exempt from VAT. (BIR Ruling No. 27-03 dated February 3, 2003) This ruling is issued on the basis of the facts as represented and is rendered only for the purpose of determining whether Mr. Shingo Inao, Second Secretary of the Embassy of Japan is entitled to the benefits of the principle 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 indorsed to that for processing and investigation. TAHIED Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service