ITAD Ruling No. 115-00

August 29, 2000 ITAD RULING NO. 115-00 Sec. 106 149 187-99 The World Bank 23rd Floor, The Taipan Place Emerald Avenue, Ortigas Center Pasig City Attention: Vinay Bhargava Country Director, Philippines East Asia and Pacific Region Gentlemen : This refers to your letter dated March 16, 2000 which was referred to this Office by the Department of Finance (DOF) requesting for the tax free local purchase of one (1) unit Ford Expedition A/T XLT 4x2 Model 2000, with Chassis No. IFMRU1564YLB10697 and Engine No. YLB10697 for the personal use of Mr. Aloysius Ordu, Principal Operations Officer of International Bank for Reconstruction and Development (The World Bank) In reply, please be informed that Section VII, Article XIII of the Agreement between the Republic of the Philippines and International Bank for Reconstruction and Development (The World Bank) concerning, Establishment of a Resident Mission in the Republic of the Philippines provides as follows: "VII. OFFICERS, EXPERTS AND CONSULTANTS OF THE BANK Article XIII "Officers, experts, persons on secondment and consultants of the Bank assigned to perform service with the Resident Mission shall enjoy in the territory of the Philippines, the following exemptions, privileges and immunities: IDSaTE "xxx xxx xxx "(h) except with respect to nationals or permanent residents of the Philippines, the right to import and re-export or sell their furniture and effects, including motor vehicles and spare parts therefor subject to payment of applicable taxes hereon if sold to and enjoying the same privileges and immunities as regards to goods, including motor fuel, purchased in the Philippines as are accorded in the Philippines to the resident members of diplomatic and international organizations. "xxx xxx xxx (j) all such other exemptions, privileges and immunities which are or may be accorded by the Government to members or officers of other international organizations." It is evident that the intention of the foregoing provisions is to place the officers of the World Bank at par with the officers of other international organizations insofar as exemption from taxes is concerned. One such organization is the Asian Development Bank whose officers are granted exemption from value-added tax (VAT) and ad valorem tax on their local purchase of motor vehicles pursuant to Memorandum of the Executive Secretary to the Secretary of Foreign Affairs and Secretary of Finance dated August 15, 1973 as implemented by Department Order No. 43-89. (BIR Ruling No. 187-99 dated November 29, 1999) Accordingly, on the basis of the favorable recommendation of the Department of Foreign Affairs and in line with the precedent rulings granting VAT and ad valorem tax exemption to ADB personnel and members of diplomatic missions on their local purchase of motor vehicles, your request on behalf of Mr. Aloysius Ordu, Principal Operations Officer of the World Bank, for exemption from VAT and ad valorem tax imposed under Sections 106(A) and 149 of the 1997 Tax Code on his purchase of one (1) unit Ford Expedition is hereby granted. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group