Embassy of the Federal Republic of Germany

July 24, 2019 ITAD BIR RULING NO. 020-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of the Federal Republic of Germany 25/F Tower II, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Gentlemen : This refers to your Note No. 128/2019 dated 19 June 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 the Federal Republic of Germany 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). HEITAD 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 25 June 2019, and the DFA Matrix on VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 05 April 2019, the Philippine Embassy and its diplomatic personnel in Berlin, Germany enjoy VAT exemption privileges on purchase of goods and services (including utilities) through reimbursement/refund ,subject to the following limitations: 1. The minimum amount of purchase per invoice/receipt, including VAT, must exceed 100.00 (based on prevailing BSP exchange rate) ; 2. The minimum purchased fuel is 300L; 3. The limit of VAT amount that can be refunded for diplomatic and non-diplomatic personnel is 1,200.00 annually per person/family, excluding purchase of motor vehicle; 4. Purchase of the goods below are NOT EXEMPT ,hence VAT paid cannot be reimbursed: a. Foodstuffs (including those purchased in restaurants and cafes); b. Tobacco products; c. All types of drinks. 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 the Federal Republic of Germany, 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. 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 the Federal Republic of Germany 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, the Embassy of the Federal Republic of Germany, its diplomatic and non-diplomatic personnel, upon the expiration of their respective VAT Certificates, 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. VEC No. 2018-322 ,duly issued on 06 August 2018, and valid until 03 November 2020 .