Australian Embassy

January 17, 2020 ITAD BIR RULING NO. 015-20 Principle of Reciprocity; RMO No. 10-2019 Australian Embassy Level 23-Tower 2, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Gentlemen : This refers to your request dated 08 November 2019 for the issuance of a BIR Ruling on the value-added tax (VAT) exemption of the Australian Embassy, its diplomatic personnel and the qualified dependents of the latter. 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. ICHDca Nevertheless, under the principle of reciprocity, this Office may grant tax privileges 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 privileges to the Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. As per the updated list of the Office of Protocol of the Department of Foreign Affairs dated 05 December 2019, the Philippine Embassy and its diplomatic personnel in Canberra, Australia enjoy VAT exemption privileges through reimbursement/refund subject to the following limitations: 1. Minimum amount of purchase should be AUD200 ( more or less PhP7,000.00 based on prevailing BSP exchange rate ) in one (1) receipt/invoice and must be paid in one transaction. The said minimum amount, however, does not apply to purchases of the following: a. Fuel; b. Diesel; c. Gasoline; d. Tobacco products; and e. Alcohol (excluding wines). 2. Purchases NOT COVERED by the tax exemption privilege: a. Services including utilities (except purchase for OFFICIAL USE only); b. Long-term accommodations in hotel-managed buildings and full-serviced apartments; c. Entertainment and restaurant services; d. Lease of venue for official functions; e. Maintenance of property and vehicles including general cleaning; f. Insurance services; g. Travel services; and h. Membership subscriptions. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Australian Embassy, its diplomatic personnel and the qualified dependents of the latter in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund , and not through point-of-sale basis. Accordingly, the Australian Embassy and its diplomatic personnel may proceed to secure the necessary VAT reimbursement/refund on their purchases of local goods in the Philippines subject to the abovementioned limitations, and following the guidelines set forth in RMO No. 10-2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue