ITAD BIR Ruling No. 011-13

January 25, 2013 ITAD BIR RULING NO. 011-13 Article 34, Vienna Convention on Diplomatic Relations Embassy of the Republic of South Africa 29th Floor Yuchengco Tower, RCBC Plaza 6819 Ayala Avenue, Makati City Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Embassy of the Republic of South Africa in Manila. 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. 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 said foreign government allows similar tax exemptions to the Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. As per the October 8, 2012 letter of the Office of Protocol of the Department of Foreign Affairs on the updates from the various Philippine Foreign Service Posts, the Philippine Embassy in Pretoria enjoys VAT exemption privileges on the local purchase of goods, services (inclusive of utilities) and on its purchase of motor vehicles thereat. Moreover, the VAT exemption on purchase of motor vehicle is extended to the diplomatic personnel of the Philippine Embassy in Pretoria. Accordingly, the Embassy of the Republic of South Africa is now included in the list of diplomatic missions and other entities entitled to VAT exemption in the Philippines on the basis of reciprocity. AaITCH Based thereon, the Embassy of the Republic of South Africa in Manila may now proceed to secure the necessary VAT exemption on the purchase of specific goods and services including the local purchase of motor vehicles in the Philippines, on the basis of reciprocity. However, its diplomatic personnel may secure VAT exemption only on purchase of motor vehicles in the Philippines. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue