BIR Ruling [DA-316-97]

September 10, 1997 BIR RULING [DA-316-97] Embassy of Portugal 2330 Roxas Boulevard, Pasay City Attention: Mr. Jose Lino B. Guerrero, Jr. Executive Director Gentlemen : This refers to your Note Verbale No. 12 dated May 6, 1997 which was referred to this Office by the Department of Finance, relative to the request of the Embassy of Portugal for exemption from payment of Value-Added Tax (VAT) and other similar charges. 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 goods and services. xxx xxx xxx" the exemption privilege of an embassy and its diplomatic agents does not include exemption from the value-added tax in its 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 Section 100 (a) and 102 (a), both of the Tax Code, as last amended by Republic Act No. 8241. HCITDc However, under the international law principle of reciprocity and equality among sovereign states, this Office may grant tax exemption to the Embassy of Portugal or its personnel on their local purchases of goods and services or rental of real properties used as office space and for other official purposes provided that you can submit to the Commissioner of Internal Revenue or his duly authorized representative a copy of the special legislation or international agreement showing that your Government allows similar tax exemption to the Philippine Embassy and its personnel on their purchases of goods and services in Portugal. (BIR Ruling No. 144-94 dated September 21, 1994) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Asst. Commissioner Legal Service