Embassy of the Republic of Angola

March 30, 2022 DA ITAD BIR RULING NO. 017-22 Section 108 (B) (3), Tax Code; Article 23, Vienna Convention Embassy of the Republic of Angola Unit 1904, The Peak Tower 107 L.P. Leviste Street, Salcedo Village 1226 Makati City Gentlemen : This refers to your Note Verbal dated March 17, 2022 requesting for a ruling confirming the exemption of the Embassy of the Republic of Angola from the payment of the value-added tax (VAT) imposed on the lease of its chancery, which was indorsed by the Department of Foreign Affairs (DFA), Office of Protocol, on March 23, 2022. The pertinent laws governing this case is Section 108 (B) (3) of the National Internal Revenue Code of 1997 (Tax Code), as amended by Republic Act No. 10963, 1 in relation to Article 23 of the Vienna Convention on Diplomatic Relations, to wit: " SEC. 108. Value-Added Tax on Sale of Services and Use and Lease of Properties . xxx xxx xxx (B) Transactions Subject to Zero Percent (0%) Rate. The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: xxx xxx xxx (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate; xxx xxx xxx" "Article 23 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." (Underscoring supplied) xxx xxx xxx" Based on the afore-quoted provisions, there is no doubt that the Embassy of the Republic of Angola is exempt from all national taxes, including VAT, in respect of the property currently being used as its chancery. As such, the lease of the subject property by a VAT-registered person/entity to such an exempt entity is effectively subject to zero percent (0%) rate. It is worth emphasizing that Section 108 (A) of the Tax Code defines the term "sale or exchange of services" as the performance of all kinds of services in the Philippines for a fee, remuneration or consideration, including those performed or rendered by lessors of property, whether real or personal. Hence, the lease of the chancery properly falls with the ambit of zero-rated sale of services. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LARRY M. BARCELO Assistant Commissioner Legal Service Footnotes 1. Tax Reform for Acceleration and Inclusion, also known as the TRAIN Act.