ITAD BIR Ruling No. 003-17

February 9, 2017 ITAD BIR RULING NO. 003-17 Executive Order No. 31; Section 34, Vienna Convention on Diplomatic Missions Australian Embassy Level 23-Tower 2 RCBC Plaza 6819 Ayala Avenue, Makati City, 1200 Gentlemen : This refers to your Note No. 410/13 dated 27 November 2013 requesting confirmation that AAA, _______________ of the Australian Embassy in Manila is not required to pay Philippine taxes and to secure Tax Identification Number (TIN) as Trustee in the British Education, Inc. (BEI), in connection with BEI's registration with the Securities and Exchange Commission. In reply, please be informed that Sections 1 and 2 of Executive Order (EO) No. 31 issued on 13 August 2001 provide that: HESIcT "EXECUTIVE ORDER NO. 31 Amending Executive Order No. 98 dated April 28, 1999 by Exempting therefrom Diplomatic Missions and International Organizations as well as their Accredited Foreign Personnel xxx xxx xxx Section 1. Diplomatic Missions and International Organizations, as identified by the Department of Foreign Affairs, together with their accredited foreign personnel, are hereby exempted from the requirements of the Taxpayer Identification Number when they apply for any Government permit, license, clearance, official paper or document; Section 2. For the purpose of establishing the bona fides of such entities and individuals, it shall be sufficient that their request for above-named documentation is accompanied by the corresponding endorsement of the Department of Foreign Affairs, which shall include the official identity card issued by the Office of Protocol of the Department. x x x" In addition thereto, there is Article 34 of the Vienna Convention on Diplomatic Relations dated 18 April 1961. It provides: "Article 34 A diplomatic agent 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 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; (f) Registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of article 23." Based on the foregoing, diplomatic missions and international organizations including their qualified foreign personnel, duly indorsed by the Department of Foreign Affairs (DFA), upon submission of a copy of the personnel's official identity card issued by the Office of Protocol of the DFA, is not required to secure a TIN when applying for a government permit. Likewise, a diplomatic agent, as indorsed by the DFA, is exempt from national taxes imposed under the National Internal Revenue Code of 1997, as amended. However, dues and taxes on private income derived from commercial undertakings of a diplomatic agent in the Philippines are not exempt from taxes. In view thereof, this Office is of the opinion and hereby rules that AAA, being _______________ of the Australian Embassy in Manila and appointed Trustee of BEI, is not required to secure Tax Identification Number (TIN) for purposes relative to BEI's registration with the Securities and Exchange Commission pursuant to EO 31. However, his private income received as trustee of BEI is subject to Philippine tax pursuant to Section 34 of the Vienna Convention on Diplomatic Relations. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue