Tax Exemption on the Diplomatic and Consular Premises or the Residence of Heads of Diplomatic Missions or Consular Posts

August 1, 1988 BIR RULING NO. 366-88 100 (2) 000-00 366-88 Gentlemen : This refers to your letter dated June 21, 1988 which was referred to this Office by the Acting Director General, Office of European Affairs, Department of Foreign Affairs, relative to your request for information as to exemption of diplomatic and consular premises or the residence of heads of diplomatic missions or consular posts, as well as the movable property therein from the value-added tax. cdtech In reply, I have the honor to inform you that under Article 34 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1968, diplomatic agents 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 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 purpose of the mission; (c) estate, succession on 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; (f) registration, court, or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23. It is clear from the foregoing that the tax exemptions of diplomatic agents/representatives do not include exemption from the indirect taxes such as the value-added tax, falling under paragraph (a) above. However, in accordance with the principle of comity of nations, and in view of the certification by the Department of Foreign Affairs that the Philippine Embassy enjoys exemption from indirect tax in Spain, local purchase shall be effectively zero-rated pursuant to Section 100(2) of the Tax Code, as amended by Executive Order No. 273. Moreover, importation of certain articles by the Embassy, or its personnel, are exempt from the value-added tax in accordance with Article 36(1) of the Vienna Convention. For your further information enclosed herewith are some informational materials regarding the value-added tax. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner