ITAD Ruling No. 112-01

November 5, 2001 ITAD RULING NO. 112-01 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-183-00 Embassy of the Republic of Korea 10th Floor, The Pacific Star Building, Makati Avenue, Makati City Attention: Hwang Seung-hyun Counsellor Gentlemen : This has reference to your letter dated October 10, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for the exemption from value-added tax (VAT) for a locally purchased car, one (1) unit of 2002 Mitsubishi Adventure Super Sport A/T, for the personal use of Hwang Seung-hyun, Counsellor of the Embassy of the Republic of Korea specifically described as follows: Type of Use: Personal Make: Mitsubishi Adventure Super Sport A/T Model Year: 2002 Color: Imola Red/Silver Mist Chassis Number: PAEVB2WLR1B001995 Engine Number: 4G63A-B6650 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 the goods and services; "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from 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 of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of the Republic of Korea or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) Mitsubishi Adventure Super Sport A/T, for the personal use of Mr. Hwang Seung-hyun is exempt from value-added tax (VAT). (BIR Ruling No. ITAD-183-00 dated December 7, 2000) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service