ITAD Ruling No. 176-03

November 21, 2003 ITAD RULING NO. 176-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. DA-ITAD-27-03 Embassy of Japan 16F 2627 Roxas Boulevard Pasay City Attention: Mr. Daisuke Fujimura Third Secretary Gentlemen : This has reference to your Note No. 572-03 dated September 30, 2003 referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for exemption from payment of value-added tax (VAT) on a locally purchased motor vehicle specifically described hereunder, for the personal use of Mr. Daisuke Fujimura, Third Secretary of the Embassy of Japan: Make: Toyota Vios Model Year: 2003 Color: Silver Steel Chassis Number: MR053HY42-04026229 Engine Number: 1NZ-X036239 CS Number: AB1589 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; "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 VAT exemption to the Embassy of Japan 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) 2003 Toyota Vios for the personal use of Mr. Daisuke Fujimura is exempt from VAT. ( BIR Ruling No. DA-ITAD-27-03 dated February 3, 2003 ) aAcDSC Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service