BIR Ruling [DA-130-98]

March 27, 1998 BIR RULING [DA-130-98] The Embassy of Venezuela Manila Gentlemen : This refers to your Note No. 111.OE. M. 1.1/No. 221 dated May 8, 1997 addressed to the Office of Protocol, Department of Foreign Affairs, Pasay City which was referred to this Office on December 22, 1997, requesting for exemption from the payment of the Value-Added Tax (VAT) on your local purchases of goods and services. LLjur 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) 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 then Sections 100(a) and 102(a) both of the Tax Code, as amended [now Sections 106(A) and 108(A) of the Tax Code of 1997]. However, under the principle of reciprocity, this office may grant exemption to the Embassy of Venezuela or its personnel on their local purchases of goods and/or services it appearing from the list submitted to this Office by the Department of Foreign Affairs that your Government allows similar tax exemption to Filipino Embassy personnel on their purchases of goods and services in your territory. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)