ITAD Ruling No. 131-00

September 15, 2000 ITAD RULING NO. 131-00 Section 106, Section 108 DA-177-99 British Embassy 15-17th Floor, LV LOCSIN Building 6752 Ayala Avenue 1226 Makati City Attention: Ms . Jo Ann Saltiga Management Assistant Gentlemen : This refers to your letter dated July 31, 2000 requesting for the issuance of a VAT Exemption Certificate on the purchase of one (1) unit Honda CRV 2.0 A/T 2000 Model with engine No. PEWD7-Y306271 and Chassis No. PARD 1830YV206285 for the British Embassy Defence Section. In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portions of which read: "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 their 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(A) and 108 of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemption to the British Embassy or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs dated June 2, 2000 and pursuant to the British guide to protocol matters entitled "Your Posting to London" that your Government allows similar exemption to Philippine Embassy and its personnel on their purchase of goods and services in your country. (DA-177-99 dated March 23, 1999) Hence, the local purchase of one (1) unit Honda CRV 2.0 A/T, 2000 Model for the British Embassy Defence Section is exempt from value-added tax. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group