Austrian Embassy

October 14, 2019 ITAD BIR RULING NO. 028-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Austrian Embassy 8th Floor, One Orion Building 11th Avenue corner 38th Street 1634 Bonifacio Global City Gentlemen : This refers to your requests, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), for the renewal of Value-Added Tax Certificates 1 for the local purchase of goods and services for the personal use of your embassy personnel. CAacTH 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 02 July 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 Vienna, Austria 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 is 73.00 (based on prevailing BSP exchange rate) ; 2. The maximum annual allowable refund for purchases of diplomatic personnel are: a. 180.00 for electricity and natural gas; b. 2,900.00 for combined purchases and/or payments for groceries including tobacco and alcohol products, medicines, internet/telephone, passenger transport, restaurants and cafes and hotel accommodation. 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 Austrian Embassy and its diplomatic personnel in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund , and NOT through point-of-sale basis. Hence, the expired VAT Certificates of the embassy personnel shall not be renewed anymore. 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 Austrian Embassy still holds a valid VEC. 2 In this regard, the embassy may still enjoy point-of-purchase VAT exemption on official purchase of goods and services until the expiration date of the said VEC. Accordingly, the diplomatic personnel of the Austrian Embassy, and the Embassy itself upon the expiration of its VAT Certificate, 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. Formerly 'Value-Added Tax Exemption Certificate' or VEC. 2. VEC No. 2019-065 , duly issued on 18 February 2019, and valid until 02 February 2020 .