ITAD Ruling No. 163-03

November 6, 2003 ITAD RULING NO. 163-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of United Kingdom 15-17th Floor, LV Locsin Building 6752 Ayala Avenue 1226 Makati, Manila Attention: Mr. John Fielder Ambassador Gentlemen : This has reference to your letter dated October 20, 2003 referred to this Office by the Department of Foreign Affairs (DFA), requesting for a tax-free local purchase of one (1) unit locally assembled motor vehicle specifically described hereunder, for the personal use of Mr. John Fielder, Her Majesty's Consul/First Secretary of the British Embassy: Make: Honda Civic 1.6 VTI-S A/T Model Year: 2003 Color: Taffeta White Chassis Number: PADES56703V202165 Motor Number: PSJD57-3203760 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; CSEHIa "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, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions 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 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) unit of Honda Civic 1.6 VTI-S A/T for the personal use of Mr. John Fielder, Her Majesty's Consul/First Secretary of the British Embassy is exempt from VAT and ad valorem taxes. ( BIR Ruling No. 206-93 dated February 3, 2003 ) aSCDcH Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service