ITAD Ruling No. 180-00

November 29, 2000 ITAD RULING NO. 180-00 Sec. 106 Sec. 108, Sec 149 BIR Ruling No. 333-99 BIR Ruling No. ITAD-34-00 Embassy of the Russian Federation 1245 Acacia Road, Dasmarias Village Makati City Attention: Ms . Galina N . Manteyfel Second Secretary Gentlemen : This has reference to your letter dated September 19, 2000 referred to this Office by the Department of Foreign Affairs (DFA) for the personal use of Ms. Galina N. Manteyfel of the Embassy of the Russian Federation, requesting for a tax-free local purchase of one (1) unit Toyota Corolla GLi specifically described as follows: Make: Toyota Corolla GLi (1,587 cc., 5-Sp Manual transmission, gasoline) Model Year: 2000 Color: Regal Beige Chassis Number: AE111-9700427 Engine Number: 4A-M549346 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 the goods and services "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value added tax (VAT) and ad valorem taxes on their 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 (A) and 108, and ad valorem tax under Section 149, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant tax exemption to the Embassy of the Russian Federation 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) Toyota Corolla GLi Model 2000, for the personal use of Ms. Galina N. Manteyfel of the Embassy of the Russian Federation is exempt from VAT and ad valorem tax. (BIR Ruling No. ITAD 34-00 dated February 3, 2000; BIR Ruling 333-92 dated October 27, 1992) ICTHDE Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group