ITAD Ruling No. 135-00

September 19, 2000 ITAD RULING NO. 135-00 Section 106 Section 108 Section 149 ITAD No. 63-00 Embassy of Malaysia 107 Tordesillas Street, Salcedo Village, Makati City Attention: Badrruddin Ab Rahman Deputy Head of Mission/Head of Chancery Gentlemen : This refers to your Note No. BY 137/2000 dated August 7, 2000, which was referred to this Office by the Department of Foreign Affairs (DFA), requesting for tax exemption on the purchase of one (1) unit Honda Civic Vti A/T, 2000 Model with Engine No. P6FD6-P504059 and Chassis No. PADEKI650YV204073, for the personal use of Miss Roslina Mat Dom, Administrative Assistant of the Embassy of Malaysia to the Philippines. HCITAS 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) and ad valorem tax 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(A) and 108, and the ad valorem tax under Section 149, all of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant exemption to the Embassy of Malaysia or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the DFA dated June 2, 2000 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. (ITAD No. 63-00 dated-March 31, 2000) Hence, the purchase of one (1) unit Honda Civic 1.6 Vti A/T 2000 Model, for the personal use of Miss Roslina Mat Dom, Administrative Assistant of the Embassy of Malaysia to the Philippines, is exempt from value-added and ad valorem taxes. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group