Embassy of the Democratic Socialist Republic of Sri Lanka

April 18, 2022 ITAD BIR RULING NO. 007-22 Principle of Reciprocity; RMO No. 10-2019, as amended by RMO No. 41-2020 Embassy of the Democratic Socialist Republic of Sri Lanka 7th Floor, No. 150, GC Corporate Plaza Building Legaspi Street, Legaspi Village 1229 Makati City Gentlemen : This refers to the Value-Added Tax (VAT) exemption on the local purchase of goods and services of the Embassy of the Democratic Socialist Republic of Sri Lanka (the Embassy) and its qualified personnel in the Philippines, as referred to this Office by the Department of Foreign Affairs, Office of Protocol (DFA Protocol) in its letter dated April 7, 2022. 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 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 Protocol, while the Philippines has no diplomatic post in Sri Lanka, the Philippine Embassy (PE) in Dhaka, Bangladesh also exercises jurisdiction over Sri Lanka. The PE, its diplomatic and non-diplomatic personnel in Bangladesh enjoy VAT exemption privileges, subject to the following limitations: The PE and its diplomatic personnel are exempt from VAT on purchase of goods and services (except public utilities) for official use, by way of reimbursement/refund . The PE, its diplomatic and non-diplomatic personnel are exempt from VAT on purchase of fuel/gasoline and alcoholic beverages at point-of-sale ; The PE and its diplomatic personnel are allowed tax-free local purchase of motor vehicles for official or personal use, subject to approval; The PE and its diplomatic personnel are allowed to import cars for official and personal use tax and duty-free, subject to arrangements with the dealer and approval by the MoFA; There is no VAT exemption on lease of property for the PE's premises and accommodation for its personnel; and VAT exemption privileges are not extended to dependents of embassy personnel. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, except for purchase of gas/fuel and alcoholic beverages which is eligible for point-of-sale VAT exemption, the grant of VAT exemption privilege for all other purchases for official use of the Embassy and its diplomatic personnel is by way of refund/reimbursement. Accordingly, the Embassy of the Democratic Socialist Republic of Sri Lanka and its 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. Very truly yours, CAESAR R. DULAY Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Deputy Commissioner Legal Group Officer-in-Charge