Embassy of the Democratic Socialist

January 19, 2023 ITAD BIR RULING NO. 002-23 Principle of Reciprocity Embassy of the Democratic Socialist Republic of Sri Lanka 7th Floor, G.C. Corporate Plaza Building No. 150 Legaspi Street, Legaspi Village 1229 Makati City Gentlemen : This refers to your Note No. 101/2022 dated November 25, 2022 which was forwarded by the Department of Foreign Affairs, Office of Protocol (DFA-OP) on December 12, 2022. The DFA-OP recommended that in view of the point-of-sale tax exemption privileges accorded to diplomatic missions in the Democratic Socialist Republic of Sri Lanka (Sri Lanka), the VAT exemption privileges of the Embassy of Sri Lanka (the Embassy) in the Philippines be shifted from refund/reimbursement to point-of-sale basis. In reply, please be informed that while the Vienna Convention on Diplomatic Relations of 1961 exempts diplomatic missions ( i.e. , embassies and consulates) and their diplomatic agents from all dues and taxes, personal or real, national, regional or municipal, they are, however, subject to the indirect taxes of a kind which are normally incorporated in the price of goods or services ( e.g. , VAT). Nevertheless, under the principle of reciprocity, this Office may grant tax privileges to a foreign embassy and to its members on their local purchases of goods and services, provided that they can submit to the Commissioner of Internal Revenue proof that the foreign government of the concerned embassy allows similar tax privileges to the Philippine Embassy or its personnel on purchases of goods or services in their country. As per the Certification it issued on November 25, 2022, the Embassy confirmed that the Government of Sri Lanka accords tax exemption privileges to the accredited Diplomatic Missions and their diplomatic personnel by way of point-of-sale. There is no minimum and or ceiling price required to avail of the tax exemption. All items purchased locally or imported are eligible for tax exemption, along with the following services: HTcADC Telecommunication including internet Electricity services Hotel services Lease of building Services of international schools Security and janitorial services Construction materials and services Repairs and maintenance of buildings of diplomatic missions Maintenance services of vehicles and equipment owned by diplomatic missions Courier and insurance services Services provided by auctioneer Based on the foregoing, and considering that the local purchases of goods and the afore-listed services by the diplomatic missions and their diplomatic personnel in Sri Lanka are exempt at point-of-sale, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy and its qualified diplomatic personnel in the Philippines are entitled to the same VAT exemption privileges. Accordingly, the Embassy of the Democratic Socialist Republic of Sri Lanka and its qualified diplomatic personnel shall be issued with VAT Certificates for their local purchase of goods and for the afore-listed services in the Philippines. This ruling amends and supersedes BIR Ruling No. ITAD-007-22 dated April 18, 2022. CAIHTE This Bureau avails itself of this opportunity to renew to the Embassy of the Democratic Socialist Republic of Sri Lanka assurances of its highest consideration. Very truly yours, (SGD.) ROMEO D. LUMAGUI, JR. Commissioner of Internal Revenue