ITAD Ruling No. 109-04

October 8, 2004 ITAD RULING NO. 109-04 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 23-99 Canadian Embassy Level 8, Tower 2 RCBC Plaza 6819 Ayala Avenue Makati City 0707 Attention: Dr . Huguette Demers Medical Attach Gentlemen : This has reference to your Note Verbale No. 1539/04 dated September 16, 2004 referred to this Office by the Department of Foreign Affairs and the Department of Finance (DFA), requesting for a tax-free purchase on a local motor vehicle for the personal use of Dr. Huguette Demers, Medical Attach of the Canadian Embassy, specifically described as follows: Make: Honda Jazz Model Year: 2004 Color: Rallye Red Conduction Sticker Number: DB4083 Engine Number: L13A31700234 Frame Number: MRHGD 18404 P020106 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 Canadian 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 June 22, 2004 that your Government allows similar exemption to Philippine Embassy or its personnel on their purchase of goods and services in your country. Hence, the sale of one (1) Honda Jazz, for the personal use of Dr. Huguette Demers, Medical Attach of the Canadian Embassy is exempt from VAT. (BIR Ruling No. 23-99 dated October 30, 1999) SITCcE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service