VAT Ruling No. 029-97

April 1, 1997 VAT RULING NO. 029-97 Sec. 103 (u)-160-95-029-97 Embassy of the Republic of Korea Makati City, Metro Manila Gentlemen : This refers to your Note No. 96-118 dated July 1, 1996 which was referred to this Office by the Department of Foreign Affairs relative to your request for exemption from the payment of the value added tax (VAT) on your local purchase of a locally assembled vehicle, Mercedes Benz, E-230, for the use of the representative office of The Export-Import Bank of Korea. cdll It is represented that the Export-Import Bank of Korea established a representative office in the Philippines; that it shall engage in conducting researches on general economic, industrial, and business situation in the Philippines, among others; that it was duly issued a Certificate of Authority dated April 24, 1996 by the Bangko Sentral ng Pilipinas; that it is registered with the Securities and Exchange Commission as per SEC License No. A1996-00638; and that the Korean Embassy through Note No. 96-118 dated July 1, 1996 requested for exemption from taxes on the purchase a locally assembled vehicle for the use of the Export-Import Bank's officers. In reply, please be informed that your request cannot be granted since there is no showing that The Export-Import Bank of Korea falls within the purview or enjoys the status of a diplomatic agent so as to merit the application of Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portions of which read: "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 Moreover, it should be understood that the above exemption from taxes on local purchase applies only with respect to those actually used by the diplomatic agent concerned in his official capacity as such and cannot be extended to other entities not entitled to such privilege. Hence, your request for exemption from the value added tax (VAT) on the local purchase of a locally assemble vehicle for the benefit of The Export-Import Bank of Korea is hereby denied for lack of legal basis. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue