ITAD Ruling No. 166-03

November 7, 2003 ITAD RULING NO. 166-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. ITAD-34-99 Embassy of the United States of America Roxas Boulevard Manila Attention: Mr. Brian W. Buckingham Attach Gentlemen : This has reference to your Note No. 0960 dated September 5, 2003 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for a tax-free purchases of one (1) unit 2003 Ford Expedition and one (1) Nissan Patrol described hereunder, for the official use of the Embassy of United States of America: 1) Make: Ford Expedition XLT V8 Petrol Automatic 4X2 Wagon Model Year: 2003 Color: Black/M. Parchment VIN Number: IFMRU15W03LB74566 Engine Number: 3LB74566 2) Make: Nissan Patrol 4.5 Gas EFI A/T Model Year: 2003 Color: Black Chassis Number: TB45061267 Engine Number: TGNSLHAY61Y12115 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; SECATH "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 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 Embassy of the United States of America 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 purchases of goods and services in your country. Hence, the local purchase of one (1) unit Ford Expedition A/T and one (1) unit of Nissan Patrol 4.5 Gas EFI A/T for the official use of the Embassy of the United States of America is exempt from VAT. (BIR Ruling No. DA-ITAD-34-99 dated October 18, 1999) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Services