Embassy of Sweden

January 9, 2020 ITAD BIR RULING NO. 013-20 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of Sweden 11th Floor, Del Rosario Law Centre 21st Drive corner 20th Drive Bonifacio Global City 1634 Taguig Gentlemen : This refers to your request, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), for the renewal of Value-Added Tax Certificate 1 for the local purchase of goods and services for personal use of your embassy personnel. 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). AScHCD Nevertheless, under the principle of reciprocity, this Office may grant tax privileges to a foreign embassy and to its members on their local purchases of goods and services, 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 Indorsement of the DFA-OP dated 30 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 Oslo, Norway, which has concurrent jurisdiction over Sweden, enjoy VAT exemption privileges on purchase of goods and services through reimbursement/refund , subject to the following limitations: 1. For goods and services: The minimum amount of purchase per invoice/receipt is SEK1,000 (inclusive of VAT) ( based on prevailing BSP exchange rate ); 2. For alcohol products, tobacco products and fuels: The minimum amount of purchase per invoice/receipt is SEK200 (inclusive of VAT and excise tax) ( based on prevailing BSP exchange rate ); 3. See attached Annex A for the list of transactions subject or not subject to VAT refund. 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 Sweden, 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 the embassy 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. HESIcT This Bureau notes that, to date, the Embassy of Sweden still holds a valid VEC. 2 In this regard, the embassy may still enjoy point-of-purchase VAT exemption on official purchase of goods and services until the expiration date of the said VEC. Accordingly, the diplomatic personnel of the Embassy of Sweden, 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 limitations, and following the guidelines set forth in RMO No. 10-2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Formerly 'Value-Added Tax Exemption Certificate' or VEC. 2. VEC No. 2018-214 , duly issued on 07 May 2018, and valid until 08 June 2020 .