Royal Danish Embassy

June 4, 2019 ITAD BIR RULING NO. 014-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Royal Danish Embassy 11th Floor, 11th Corporate Center 11th Avenue cor. Triangle Drive Bonifacio Global City 1634 Taguig City Gentlemen : This refers to your Note Verbale No. 26/2019 dated 08 April 2019, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP) requesting for a BIR ruling to confirm value-added tax (VAT) exemption on the local purchase of goods and services of the Royal Danish Embassy, its diplomatic and non-diplomatic 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). 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 02 May 2019, and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 05 April 2019, the Philippine Embassy, its diplomatic and non-diplomatic personnel in Copenhagen, Denmark enjoy VAT exemption privileges through reimbursement/refund , subject to the following limitations: 1. Minimum amount of purchase should be DKK1,500.00 ( more or less Php12,000.00, based on prevailing BSP exchange rate ) and the VAT amount is not less than DKK300.00 , which must appear in one (1) single bill/invoice and must be paid in one transaction. The minimum amount does not apply to supply of electricity, town gas, natural gas, water, heating oil, district heating, waste disposal and sewage services. 2. VAT exempt purchases of goods and services INCLUDES : a. Newspapers b. Stamps c. Passenger transport d. Dentists and doctors' bills EXCEPT from health certificates e. Insurance policies f. Admission fees for museums g. School fees h. Petrol and diesel fuel 3. Purchase of the items/services below are NOT EXEMPT , hence VAT paid cannot be reimbursed: a. Antiques b. Auctioned items c. Secondhand items d. Gift certificates e. Medicine f. Ammunition and firearms g. Bridge tolls h. Membership fees for clubs and associations i. Renovation of a privately owned property j. Admission fees for entertainment (cinemas, theaters, exhibitions, etc.) k. Construction material; installation and construction expenses l. Expenses in relation to buying and selling of property ( e.g. , lawyer's fee) m. Insurance cases when expense is covered by the insurance company Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Royal Danish Embassy, 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 Royal Danish Embassy, its diplomatic and non-diplomatic personnel may proceed to secure the necessary VAT reimbursement/refund on their purchases of local goods and services in the Philippines subject only to the aforementioned limitations, and following the guidelines set forth in Revenue Memorandum Order No. 10-2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue