ITAD Ruling No. 111-04

October 26, 2004 ITAD RULING NO. 111-04 Sec 106 & 108 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 13-99 The People's Bureau of the Great Socialist People's Libyan Arab Jamahiriya 1644 Dasmarias Avenue corner Mabolo Streets Dasmarias Village, Makati City Gentlemen : This has reference to your Note Verbale No. 079/04 dated September 21, 2004 referred to this Office by the Department of Foreign Affairs and the Department of Finance (DFA), requesting for a tax-free purchase on two (2) units of local motor vehicles for the official use of The People's Bureau of the Great Socialist People's Libyan Arab Jamahiriya, specifically described as follows: Make: 2 units Toyota Corolla Altis 1.6E A/T Model Year: 2004 Colors: Flaxen MM/Azure Conduction Sticker Numbers: AE4766/AE1700 Engine Numbers: 3ZZ-4362922/3ZZ-4366075 Frame Numbers: ZZE121-8013498/ZZE121-8013241 and Make: Ford Escape XLS 2.3L 4X2 A/T Model Year: 2004 Colors: Machine Silver Engine Numbers: L3545341 VIN Numbers: PE2ET67141WA00241 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. STcADa However, applying the principle of reciprocity, this Office may grant exemption to The People's Bureau of the Great Socialist People's Libyan Arab Jamahiriya 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 purchases of goods and services in your country. Hence, the sale of two (2) Toyota Corolla Altis 1.6E A/T and one (1) Ford Escape XLS 2.3L 4X2 A/T, for the official use of The People's Bureau of the Great Socialist People's Libyan Arab Jamahiriya is exempt from VAT and ad valorem taxes. (BIR Ruling No. 13-99 dated July 28, 1999) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service