Embassy of the Kingdom of the Netherlands

February 28, 2022 ITAD BIR RULING NO. 003-22 Principle of Reciprocity; RMO No. 10-2019, as amended by RMO No. 41-2020 Embassy of the Kingdom of the Netherlands 26th Floor, Equitable Bank Tower 8751 Paseo de Roxas 1227 Makati City Gentlemen : This refers to the letter dated January 17, 2022 of the Department of Foreign Affairs, Office of Protocol (DFA-OP) recommending the amendment of BIR Ruling No. ITAD-038-19 issued on October 18, 2019 concerning the value-added tax (VAT) exemption of the Embassy of the Kingdom of Netherlands, its diplomatic and non-diplomatic personnel on the local purchase of goods and services. 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, this Office may confirm the tax privileges on the local purchases of goods and services of a foreign embassy and its members on the basis of reciprocity, provided that they can submit to the Commissioner of Internal Revenue a 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 above letter of the DFA-OP and the DFA-Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated January 27, 2022, the Philippine Embassy (PE), its diplomatic and non-diplomatic personnel in The Hague, Netherlands enjoy VAT exemption privileges through reimbursement/refund , subject to the following limitations: 1. Goods and Services VAT exemption is by way of refund which must be submitted quarterly, supported by invoices/receipts where goods or services purchased are clearly described. VAT exemption covers only purchases of goods and services intended for official use , including hotel services (including food and beverage) during official reception or functions. Supplies for movable goods and provision of services for purposes of renovation, restoration and maintenance are also included. Minimum amount of purchase is 70 (inclusive of VAT) (based on BSP prevailing exchange rate) . Advance exemption for the Embassy is allowed for large purchases of not less that 35,000. Purchases of food, beverages, tobacco, and goods and services supplied by hotels, restaurants, cafes, catering organizations and related bodies intended for personal use of diplomatic personnel are not covered by the exemption. 2. Utilities The Embassy, its diplomatic and non-diplomatic personnel are exempt from VAT on their purchases of gas, water, electricity, security, internet and telecommunication services (including mobile phone services). 3. Lease of Property Embassy lease of both movable and immovable properties are VAT- exempt . Diplomatic and non-diplomatic personnel are not exempt from VAT on lease of immovable property and other property services. 4. Fuel For the Embassy motor vehicle: 500 liters per month per vehicle (maximum of five vehicles) For additional motor vehicle: 300 liters per month per vehicle For diplomatic and consular officers: 1st car 300 liters per month; 2nd car 200 liters For administrative and technical staff: 1st car 200 liters per month; 2nd car 100 liters Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy of The Netherlands, its diplomatic and non-diplomatic personnel in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund , and not through point-of-sale basis. Accordingly, the Embassy of The Netherlands, its diplomatic and non-diplomatic personnel may proceed to secure the necessary VAT reimbursement/refund on their purchases of goods and services in the Philippines subject only to the aforementioned limitations, and following the guidelines set forth in Revenue Memorandum Order (RMO) No. 10-2019, as amended by RMO No. 41-2020. This ruling amends and supersedes BIR Ruling No. ITAD-038-19 dated October 18, 2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue