Embassy of Finland

May 18, 2022 ITAD BIR RULING NO. 008-22 Principle of Reciprocity; RMO No. 10-2019, as amended by RMO No. 41-2020 Embassy of Finland 27th Floor, The Finance Centre 26th Street Cor. 9th Avenue Bonifacio Global City 1634 Taguig City Gentlemen : This refers to the Value-Added Tax (VAT) exemption on the local purchase of goods and services by the Embassy of Finland 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 indorsement dated March 24, 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 Finland, the Philippine Embassy (PE) in Stockholm, Sweden also exercises concurrent jurisdiction over Finland. The PE, its diplomatic and non-diplomatic personnel in Stockholm enjoy VAT exemption privileges through reimbursement/refund , subject to certain limitations, both for official purchases (Annex A) and personal purchases (Annex B) . 1. Minimum amount for personal purchases should be SEK1,000 (approximately PhP5,563.00 ) including VAT; 2. For alcohol products, tobacco products and fuel, the minimum amount is SEK200 (approximately PhP1,113 ) including VAT and excise tax. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy of Finland, 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 Finland, 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-001-21 dated January 4, 2021. Very truly yours, CAESAR R. DULAY Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Deputy Commissioner Legal Group Officer-in-Charge