ITAD Ruling No. 172-00

November 10, 2000 ITAD RULING NO. 172-00 Sec. 106, Sec. 108 & Sec. 149 BIR Ruling No. ITAD 72-00 Embassy of the Republic of Korea 10TH Floor, The Pacific Star Building Makati Avenue, Makati City Attention: Ms . Yeun-sil Park Administrative Staff Gentlemen : This refers to your Note No. KPH 2000-166 dated August 23, 2000 which was referred to this Office by the Department of Foreign Affairs (DFA), requesting for an exemption from payment of value-added tax (VAT) and ad valorem tax on a local purchase of one (1) unit Honda CRV 2.0 A.T Model 2000, Chassis No. PADRD 1830YV20693, Engine No. PEWD7-Y306281, heather mist silver, for the personal use of Ms. Yeun-sil PARK, Administrative Staff of the Embassy of the Republic of Korea. AIHTEa 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 on 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 the value-added tax (VAT) and ad valorem taxes 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 tax under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of the Republic of Korea 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) Honda CRV 2.0 A/T Model 2000, for the personal use of Mr. Yeun-sil PARK is exempt from VAT and ad valorem taxes based on reciprocity.(BIR Ruling No. ITAD-72-00 dated May 18, 1994.) Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Enforcement Group