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September 19, 2018DA ITAD BIR RULING NO. 040-18Principle of Reciprocity;BIR Ruling No. ITAD-313-11Embassy of Japan2627 Roxas BoulevardPasay CityGentlemen :This has reference to your Note No. 440-18 dated August 20, 2018, referred to this Office by the Department of Finance and the Department of Foreign Affairs (DFA), requesting for the exemption from the payment of value-added (VAT) and ad valorem taxes on the local purchase of a motor vehicle for the official use of the Embassy of Japan, specifically described as follows: TIADCc Type of Use:OfficialMake:Toyota Camry 2.5 V ATModel Year:2018Color:Attitude BlackFrame Number:MR053AK50J9000625Engine Number:2AR1948197  In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads:"ARTICLE 34A 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 and ad valorem tax, which are indirect taxes, on their local...