Embassy is Exempt from the Payment of the Documentary Stamp Tax

May 4, 1989 BIR RULING NO. 095-89 196 144-84 095-89 Gentlemen : This refers to your letter dated April 21, 1989 stating that your government is about to purchase a residence in North Forbes, Makati, Metro Manila; and that on the recommendation of your lawyer, you would like to request for exemption from the payment of documentary stamp tax, local transfer taxes and registration fees relevant to the purchase. cdta In reply, I have the honor to inform you that pursuant to Section 34 of the Vienna Convention on Diplomatic Relations adopted at Vienna on April 18, 1961, diplomatic agents are 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 or services; b. dues and taxes on private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State, for the purposes of the mission; c. estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of Article 39; d. dues and taxes on private income having its source in the receiving State and capital taxes on investments made in commercial undertakings in the receiving State; e. charges levied for specific services rendered; and f. registration, court or records fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23. Moreover, Article 23 of said Convention provides: "1. The sending State and the Head of the 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 persons contracting with the sending State or the head of the mission." It is clear from the foregoing that the documentary stamp tax on the sale of real property to the Embassy does not fall within the purview of anyone of the aforesaid exceptions. Accordingly, that Embassy is exempt from the payment of the documentary stamp tax imposed by Section 196 of the Tax Code, on the above proposed purchase of real property. However, it is provided that whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. (Section 173, Tax Code, as amended) Accordingly, the seller of the real property to be purchased by that Embassy shall be the party directly liable for the payment of the documentary stamp tax due thereon. As regards your exemption from the local transfer taxes and request that you be exempt from the payment of registration fee relevant to said purchase, it is suggested that your query be directed to the local government concerned and to the Office of the Register of Deeds which have jurisdiction over the same. Very truly yours, (SGD.) JOSE U. ONG Commissioner