BIR Ruling [DA-144-00]

March 10, 2000 BIR RULING [DA-144-00] 77-95; 91-97; DA-144-2000 Embassy of the Republic of Singapore 6/F ODC International Plaza Building 219 Salcedo Street, Legaspi Village Makati City, Metro Manila Attention: Mr. Tan Siok Chye Second Secretary Gentlemen : This refers to your letter dated January 11, 2000 requesting for clarification as to whether the Embassy of the Republic of Singapore is exempted from paying the following: 1) Capital Gains Tax; 2) Documentary Stamp Tax; 3) Transfer Tax (Local Government Tax) 4) Real Estate Tax; and 5) Registration Fee In reply, please be informed that pursuant to Article 23 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1961 (Vol. IV, P. 445-460, Phil. Tax Treaty Series) pertinent portion of which reads "ARTICLE 23 "1. The sending state and the head of mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased, other than such as represent payment for specific services rendered, "2. The exemption from taxation referred to in this article shall not apply to such dues and taxes payable under the law of the receiving state by the person contracting with the sending state or the head of the mission." It is clear from the aforequoted provision of the Convention that the Embassy of the Republic of Singapore is exempt from the capital gains tax on the sale of its property in the Philippines. Since under Article 23 of the Convention the Embassy of the Republic of Singapore is exempt from payment of internal revenue taxes for which it is directly liable, i.e., capital gains tax; then it is likewise exempt from the documentary stamp tax due on the sale of its property in the Philippines. (BIR Ruling No. 97-97 dated March 7, 1997) However, Section 176 of the Tax Code of 1997, provides, among others, that whenever one party to the taxable document enjoys exemption from the tax therein imposed, the other party thereto who is not exempt shall be the one directly liable to the tax, hence, the buyer shall be the party directly liable for the payment of the said tax considering that the Embassy is tax-exempt. (BIR Ruling No. 77-95 dated April 24, 1995) It is not within the jurisdiction of this Office to rule on the exemption of the Embassy with respect to transfer tax (local government tax), real estate tax, and registration fee. You may address your query to the Department of the Interior and Local Government-Finance, which has jurisdiction on the said matter. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)