Delegation of the European Union

January 10, 2018 ITAD BIR RULING NO. 001-18 Principle of Reciprocity Delegation of the European Union to the Philippines (EU) 30/F Tower 2, RCBC Plaza 6819 Ayala Avenue, Makati City, 1200 Gentlemen : This refers to your request for the issuance of Value-Added Tax Exemption (VAT) Certificate referred to this Bureau by the Office of Protocol of the Department of Foreign Affairs (DFA). HTcADC In this regard, please be informed that Article 23 of the Vienna Convention on Diplomatic Relations of 1961 (VCDR) exempts diplomatic missions from all national taxes in respect of the premises of the mission. Moreover, Article 34 of the same VCDR exempts diplomatic agents from all dues and taxes, personal or real, national, regional or municipal. However, diplomatic agents are subject to the indirect taxes of a kind which are normally incorporated in the price of goods or services, e.g. , VAT. Under the principle of reciprocity, this Office may grant VAT exemption to the embassy of a foreign state and to the members of diplomatic missions on their local purchases of goods and services, provided that they can submit to the Commissioner of Internal Revenue proof that the said foreign government allows similar tax exemptions to the Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. As per the DFA's letter of 23 August 2016, the EU headquarters is located in Brussels, Belgium, and is considered as the de facto capital of EU. The DFA categorically confirms that the Philippine Mission in Brussels is accorded the following VAT exemption privileges: For the embassy - VAT exemption on purchase of goods and services without restrictive provisions on amounts of receipt For diplomatic personnel - VAT exemption privileges with a minimum amount of 300.00 1 per single receipt for local purchase of personal goods , but excluding food items Based thereon, the Delegation of European Union to the Philippines and its diplomatic personnel in Manila may now proceed to secure the necessary VAT exemption on the purchase of specific goods and services (but only for the mission), locally purchased in the Philippines, within the above-cited restrictions, on the basis of reciprocity. Please be guided accordingly. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. For VAT exemption purposes, Euro conversion to PH Peso shall be based on prevailing exchange rate of the Bangko Sentral ng Pilipinas.