ITAD BIR Ruling No. 029-17

October 10, 2017 ITAD BIR RULING NO. 029-17 Article 34, Vienna Convention on Diplomatic Relations ______________________________ ______________________________ ______________________________ Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Embassy of the __________ in Manila and its qualified embassy personnel. HSAcaE 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 and ad valorem tax. 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 June 29, 2017 list of the Office of Protocol of the Department of Foreign Affairs and its indorsement of August 3, 2017, the Philippine Embassy and its diplomatic personnel in ____________________ are accorded refund on VAT paid on purchase of goods and services, and on purchase of motor vehicles thereat. Accordingly, the Embassy of __________ is now included in the list of diplomatic missions and other entities entitled to VAT and ad valorem tax exemption in the Philippines on the basis of reciprocity. Based thereon, the Embassy of the __________ and its diplomatic personnel in Manila may now proceed to secure the necessary VAT exemption on the purchase of specific goods and services, and motor vehicles locally purchased in the Philippines, on the basis of reciprocity. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue