ITAD BIR Ruling No. 022-17

June 29, 2017 ITAD BIR RULING NO. 022-17 Principle of Reciprocity Assistant Secretary Jerril G. Santos Office of Protocol, Department of Foreign Affairs 2330 Roxas Boulevard, Pasay City, 1300 Dear Assistant Secretary Santos, This refers to your letter of 10 February 2017 requesting this Bureau's guidance on the request of the Embassy of Canada for the issuance of value-added tax exemption certificates (VEC) for the legal dependent children of its diplomatic personnel as there are a number of local establishments that do not grant exemption to dependent children at point-of-sale in the absence of a VEC. In reply, please be informed that VAT exemption privileges are accorded to qualified diplomats and their dependents in the Philippines based only on the principle of reciprocity. 1 Consequently, this Bureau issues rulings and certificates granting VAT exemption privileges to qualified embassy personnel based on updates/categorical confirmation by the Department of Foreign Affairs (DFA) of the VAT exemption privileges being accorded to the members of Philippine missions which vary from country to country. Hence, the VAT exemption privileges may be accorded to legal dependent children of qualified embassy personnel in the Philippines IF and only IF, the same treatment is being accorded to our Filipino diplomats' children abroad. The DFA has conveyed that in Canada, the diplomatic personnel of the Philippine Embassy in Ottawa, Canada enjoy waiver on payment of tax on goods and services on reimbursement basis. Moreover, that tax exemption privileges enjoyed by the diplomatic personnel are extended to their qualified dependents whose claim is filed by the principal. Considering the DFA confirmation, this Office is of the opinion that the same exemption privileges may be accorded to the legal dependent children of the qualified diplomatic personnel of the Canadian Embassy. However, only legal dependent children aged 18 years old and above will be issued separate VECs for their personal purchase of goods and services. With regard to the legal dependent minor children (below 18 years old) , the exemption privileges of their diplomatic parents may be extended to them as derivatives from their diplomat parents. For this purpose, this Bureau shall issue a ruling to confirm that the exemption privileges of their parents are extended to them. When making purchase for minor dependent, the Canadian Embassy diplomat parent claiming exemption for his/her minor child must show a copy of the BIR ruling and the valid DFA identification (ID) of the child. A list of dependent children below the age of 18 of the Canadian Embassy personnel in the Philippines with copy of their passport and valid DFA ID shall be provided this Bureau for verification and monitoring purposes. Please be guided accordingly. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Based on Revenue Memorandum Order No. 22-2004.