Embassy of the United States of America

June 23, 2022 ITAD BIR RULING NO. 011-22 Principle of Reciprocity Embassy of the United States of America 1201 Roxas Boulevard, Ermita 1000 Manila 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 United States of America (US Embassy) and its qualified embassy personnel in the Philippines, as referred to this Office by the Department of Foreign Affairs, Office of Protocol (DFA-OP) in its indorsement dated June 13, 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 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-OP and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated May 31, 2022, the Philippine Embassy , its diplomatic and non-diplomatic personnel and their qualified dependents in Washington, D.C. enjoy VAT exemption privileges on the local purchase of goods and services (inclusive of utilities), including the purchase of motor vehicles therein, at point-of-sale. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the US Embassy, its diplomatic and non-diplomatic personnel including their qualified dependents in Manila are entitled to the same VAT exemption privileges at point-of-sale. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue