BIR Ruling [DA-249-99]

April 23, 1999 BIR RULING [DA-249-99] The Embassy of Czech Republic Manila Gentlemen : This refers to your Note No. 99/029 dated February 4, 1999 which was referred to this Office by the Department of Foreign Affairs relative to your request for exemption from the value-added tax (VAT) on your local purchases of goods and services in the Philippines. cdtech 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 the 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 Czech Republic 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. (BIR Ruling No. DA-316-97 dated September 10, 1997) prcd Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue