ITAD Ruling No. 138-04

November 25, 2004 ITAD RULING NO. 138-04 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-057-01 Embassy of the Republic of Singapore 35 Floor, Tower I, The Enterprise Center, Ayala, Makati City Gentlemen : This has reference to your Note Verbale No. MNL 091/200 dated November 9, 2004 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for a tax-free purchase on one (1) unit of local motor vehicle for the official use of the Embassy of the Republic of Singapore, specifically described as follows: Make: Toyota Camry 2.4V A/T Model Year: 2004 Color: Flaxen Frame Number: ACV30-9001290 Engine Number: 2AZ-1557930 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 find 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 exemption to the Embassy of the Republic of Singapore 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 June 22, 2004 that your Government allows similar exemption to Philippine Embassy or its personnel on their purchase of goods and services in your country. TcHCIS Hence, the local purchase of one (1) Toyota Camry 2.4V A/T for the official use of the Embassy of the Republic of Singapore is exempt from VAT and valorem taxes. (BIR Ruling No. 057-01 dated July 2, 2001) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service