Department of Foreign Affairs

January 12, 2018 ITAD BIR RULING NO. 004-18 Principle of Reciprocity Department of Foreign Affairs 2330 Roxas Boulevard 1300 Pasay City Attention: Director Rodillo R. Catallan Immunities and Privileges Office of Protocol Gentlemen : This refers to the request for the issuance of Value-Added Tax (VAT) Exemption Certificate on the local purchase of goods and services by AAA , a Lithuanian national , and __________ of the Delegation of the European Union (European Union) to the Philippines. In this regard, please be informed that while Article 34 of the Vienna Convention on Diplomatic Relations of 1961 exempts diplomatic agents from all dues and taxes, personal or real, national, regional or municipal, they are nevertheless subject to the indirect taxes of a kind which are normally incorporated in the price of goods or services, e.g. , VAT and excise duty. acEHCD Nevertheless, under the principle of reciprocity, this Office may grant tax 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 foreign government of the diplomatic mission allows similar tax exemptions to the Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. As regards the diplomatic agents of the European Union, they may be issued exemption from indirect taxes if the DFA categorically confirms that the European countries of these diplomats accord similar exemption privileges to Philippine Embassy agents in their jurisdiction. As per the updated list submitted to the Bureau of Internal Revenue by the Office of Protocol of the Department of Foreign Affairs (DFA) dated 22 November 2017, and the DFA's 1st indorsement dated 21 November 2017, the Philippine Embassy in Warsaw Poland , which has concurrent jurisdiction over Lithuania , its diplomatic and non-diplomatic personnel, enjoy VAT exemption privileges on the local purchase of goods and services ( with a minimum amount of EUR 232, inclusive of VAT, per invoice ), as well as, tax-free/duty-free purchase of motor vehicles thereat ( the total value of excise duty shall not be less than EUR 58 ). In view of the foregoing, in recognition of the international law principle of reciprocity, and the rationale for the issuance of VEC under Revenue Memorandum Order (RMO) No. 22-2004, the Embassy of Poland in the Manila is now included in the list of diplomatic missions and other entities entitled to the VAT and ad valorem tax exemption in the Philippines. Accordingly, the Embassy of Poland, its diplomatic and non-diplomatic personnel, including the qualified diplomatic personnel of the European Union who are nationals of Lithuania, may now proceed to secure the necessary VAT exemption on the purchase of goods and services, and motor vehicles locally purchased in the Philippines. This ruling is issued on the basis of the foregoing facts, as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue