BIR Ruling [DA-205-99]

March 30, 1999 BIR RULING [DA-205-99] Embassy of the Republic of Indonesia Manila Attention: Nunung A . Anggawijaya Counsellor Gentlemen : This refers to your letter dated January 27, 1999 through the Department of Foreign Affairs requesting for exemption from the payment of the Value-Added Tax (VAT) on your purchases of goods and services. 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 its local purchases of goods and services. In other words purchases by that Embassy of goods/or services shall be subject to the value-added tax prescribed under Sections 106(A) and 108(A) of the Tax Code of 1997. However, under the principle of reciprocity, this Office hereby grants exemption to the Embassy of the Republic of Indonesia or its personnel on their local purchases of goods and/or services it appearing 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 and Enforcement Group)