Approving the 2014 Investment Priorities Plan

December 3, 2013 DA ITAD BIR RULING NO. 055-13 Principle of Reciprocity; BIR Ruling No. ITAD-315-11 Delegation of the European Union to the Philippines 30th Floor, Tower II, RCBC Plaza, 6819 Ayala Avenue Makati City, 1200, Philippines Attention: Mr. Walter Van Hattum Counsellor Gentlemen : This has reference to your Note No. 2013/129 dated September 23, 2013 referred to this Office by the Department of Finance (DOF) and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added tax (VAT) on the purchase of a previously-owned and tax-exempted motor vehicle for the personal use of Mr. Walter Van Hattum (Dutch National) , Counsellor of the Delegation of the European Union from Ms. Andrea Fennesz (Austrian National) , First Counsellor of the same Delegation, specifically described as follows: Make Model Color Chassis Number Engine Number Plate Number Honda CRV 2007 Satellite MRHRE18307P010631 R20A11800889 DC-8001 4x2 A/T Silver In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations 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" Thus, the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the VAT prescribed under Sections 106 and 108 of the National Internal Revenue Code of 1997, as amended. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the Kingdom of Netherlands and/or its personnel on their local purchase of motor vehicles it appearing from the list submitted by the DFA dated July 23, 2013 that the Government of the Kingdom of Netherlands allows similar exemption to the Philippine Embassy and/or its personnel on their local purchase of motor vehicles in the Netherlands. EIDATc Hence, since the transferor and the transferee of the subject motor vehicle, are VAT exempt individuals, the sale of one (1) unit 2007 Honda CRV 4x2 A/T by Ms. Andrea Fennesz to Mr. Walter Van Hattum, for the latter's personal use continues to be exempt from VAT. (BIR Ruling No. ITAD-315-11 dated December 8, 2011) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) ESTELA V. SALES Deputy Commissioner Legal Group