ITAD Ruling No. 118-02

June 7, 2002 ITAD RULING NO. 118-02 Secs. 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-43-99 Embassy of the Socialist Republic of Vietnam Manila, Philippines Attention: Mr. Nguyen Thac Dinh Ambassador Gentlemen : This has reference to your letter dated May 15, 2002 referred to this Office by the Department of Foreign Affairs, Office of Protocol, requesting for exemption from payment of value added tax (VAT) on the local purchase of one (1) Toyota Camry GXE A/T specifically described as follows: Type of Use : Official Make : Toyota Camry GXE A/T Model Year : 2002 Chassis Number : 53SK20-07000769 Engine Number : 5S-4432055 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 VAT exemption to the Embassy of the Socialist Republic of Vietnam 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 September 4, 2001 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) Toyota Camry GXE A/T for the official use of the Embassy of the Socialist Republic of Vietnam is exempt from value-added tax (VAT). (BIR Ruling No. ITAD-43-99 dated November 9, 1999) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service