Embassy of Mexico

January 9, 2020 ITAD BIR RULING NO. 012-20 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of Mexico L6, GC Corporate Plaza 150 Legaspi, Legaspi Village 1229 Makati City Gentlemen : This refers to your request for the renewal of the Value-Added Tax Exemption Certificate (VEC) of your diplomatic personnel on local purchase of goods and services for their personal use. SDHTEC 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 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 privileges to a foreign embassy and to their members on their local purchases of goods and services, provided that they can submit to the Commissioner of Internal Revenue proof that the government of the concerned embassy allows similar tax privileges to the Philippine Foreign Service Post and its personnel on purchases of goods or services in their country. As per the Indorsement of the DFA-OP dated 26 September 2019, and the DFA Matrix on VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 18 September 2019, the Philippine Embassy, its diplomatic and non-diplomatic personnel in Mexico City, Mexico enjoy VAT exemption privileges on purchase of goods and services (including utilities) through reimbursement/refund . However, the tax exemption privilege does not cover tuition fee. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, and pursuant to Revenue Memorandum Order (RMO) No. 10-2019, the Embassy of Mexico, 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. Hence, the expired VAT Certificates of your diplomatic personnel shall not be renewed anymore. It is worthy to mention, however, that under the said RMO No. 10-2019, all holders of a valid and current VAT Exemption Certificate (VEC) may continue to use the same until the end of the validity period of their respective VECs. This Bureau notes that, to date, the Embassy of Mexico still holds a valid VEC. 1 Hence, the embassy may still enjoy point-of-purchase VAT exemption until the expiration date of the said VEC. Accordingly, your diplomatic and non-diplomatic personnel, and the Embassy itself, upon the expiration of its VAT Certificate, may proceed to secure the necessary VAT reimbursement/refund on purchases of local goods and services in the Philippines subject only to the aforementioned limitation, and following the guidelines set forth in RMO No. 10-2019. HSAcaE Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. VEC No. 2018-619 , duly issued on 14 December 2018, and valid until 23 January 2021 .