ITAD Ruling No. 124-03

August 11, 2003 ITAD RULING NO. 124-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Royal Thai Embassy 107 Rada St., Legaspi Village Makati City Attention: Ms. Nattanipa Burusapat First Secretary Gentlemen : This has reference to your Note No. 40001/509 dated July 18, 2003 referred to this Office by the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) and ad valorem taxes on a locally purchased car specifically described hereunder, for the personal use of Ms. Nattanipa Burusapat, First Secretary of the Royal Thai Embassy: Make: Honda Civic 1.6 VTi-S A/T Model Year: 2003 Color: Zircon Blue Frame Number: PADES56703V202106 Motor Number: PSJD57-3203691 Cond. St. Number: DA 1007 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. However, applying the principle of reciprocity, this Office may grant VAT and ad valorem tax exemption to the Embassy of Japan 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) Honda Civic 1.6 VTi-S A/T for the personal use of Ms. Nattanipa Burusapat is exempt from VAT and ad valorem taxes. ( BIR Ruling No. DA-ITAD-206-93 dated May 11, 1993 ) HaAISC Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service