Embassy of Hungary

June 20, 2019 ITAD BIR RULING NO. 016-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of Hungary 8th Floor, Del Rosario Law Center 21st Drive Corner 20th Drive Bonifacio Global City 1630 Taguig Gentlemen : This refers to your Note Verbal dated 14 May 2019, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), requesting for a BIR ruling on the value-added tax (VAT) exemption on the local purchase of goods and services for the Embassy of Hungary and its 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 16 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 including the qualified dependents of the latter, enjoy VAT exemption privileges in Budapest, Hungary through reimbursement/refund , subject to the following limitations: 1. for the embassy , there is no limit in the amount that can be refunded per year; and 2. for the diplomatic and non-diplomatic personnel , the maximum total amount that can be refunded on purchase of goods, services, utilities, motor vehicle and petrol is Php60,000.00 per year, per person. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy of Hungary, its diplomatic and non-diplomatic personnel in the Philippines are entitled to VAT exemption privileges through reimbursement/refund , and not through point-of-sale basis. Accordingly, the Embassy of Hungary, its diplomatic and non-diplomatic personnel 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 Revenue Memorandum Order (RMO) No. 10-2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue