ITAD BIR Ruling No. 024-12

January 31, 2012 ITAD BIR RULING NO. 024-12 Article 34, Vienna Convention on Diplomatic Relations Embassy of New Zealand 23rd Floor BPI Buendia Center Senator Gil Puyat Avenue Barangay Bel-Air, Makati City 1209 Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Embassy of New Zealand in Manila and its qualified embassy personnel. 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. Nevertheless, under the principle of reciprocity, this Office may grant tax exemption 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 exemptions 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 indorsed to this Bureau on November 23, 2011, the Philippine Embassy, its diplomatic and non-diplomatic personnel in Wellington, New Zealand enjoys VAT exemption privileges on the local purchase of goods and services including the purchase of motor vehicles thereat, except for non-diplomatic personnel who can avail of the VAT exemption privilege only within the first six (6) months from their arrival in the Philippines, and, the exemption does not cover their local purchase of motor vehicles . Accordingly, the Embassy of New Zealand is now included in the list of diplomatic missions and other entities entitled to VAT exemption in the Philippines on the basis of reciprocity. cDCHaS This Office, therefore, is of the opinion as it hereby rules that the Embassy of New Zealand, its diplomatic and non-diplomatic personnel in Manila are exempt from VAT on the purchase of goods and services, including the local purchase of motor vehicles in the Philippines on the basis of reciprocity, subject only to the above exception. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue