ITAD Ruling No. 121-01

December 10, 2001 ITAD RULING NO. 121-01 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of Italy 6th Floor, Zeta Building 191 Salcedo Street Legaspi Village Makati City Attention: Mr. Angelo Antonio Cartone Administrative/Technical Staff Member Gentlemen : This has reference to your letter dated October 9, 2001 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) on a locally purchased car specifically described hereunder, for the personal use of Mr. Angelo Antonio Cartone, Administrative/Technical Staff Member of the Embassy of Italy: Make : KIA 4D Sportage Model Year : 1995 Color : Brave Blue/grey Chassis Number : KNEJA5535T43 Engine Number : FE729338 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 Italy 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) KIA 4D Sportage for the personal use of Mr. Angelo Antonio Cartone is exempt from value-added tax (VAT). (BIR Ruling No. 206-93 dated May 11, 1993) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service