Delegation of the European Union

October 14, 2019 ITAD BIR RULING NO. 030-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Delegation of the European Union to the Philippines 30th Floor, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Gentlemen : This refers to your requests, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), for the renewal of the Value-Added Tax Exemption Certificates (VEC) 1 of your diplomatic personnel in connection with the local purchase of goods and services for their personal use. DcHSEa In reply, please be informed that while the Vienna Convention on Diplomatic Relations of 1961 exempts diplomatic missions ( i.e. , embassies and consulates) and 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 government of the concerned embassy allows similar tax privileges to the Philippine Foreign Service Post and its personnel on purchases of goods or services in their country. As per the Indorsement of the DFA-OP dated 03 July 2019, and the DFA Matrix on VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 05 April 2019, the Philippine Embassy, its diplomatic and non-diplomatic personnel in Brussels, Belgium where the headquarters of the European Union is located and considered as its de facto capital, enjoy VAT exemption privileges on local purchase of goods, services and utilities through reimbursement/refund , subject to the following limitations: 1. The minimum amount of purchase per invoice/receipt: a. For the Embassy 125.00 (based on prevailing BSP exchange rate) ; b. For the diplomatic and non-diplomatic personnel the minimum amount of purchase per invoice 50.00 (based on prevailing BSP exchange rate) . 2. See attached Annex A on the list of transactions which DO NOT benefit from VAT exemption in Brussels. 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 Delegation of the European Union to the Philippines, 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. Hence, the expiring VAT Certificates of your 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 Delegation of the European Union 2 and some of its diplomatic personnel still hold valid VECs. In this regard, they may still enjoy point-of-purchase VAT exemption on official purchase (for the Delegation) or personal purchase (for the diplomatic personnel) of goods and services until the expiration date of their VECs . SCaITA Accordingly, the diplomatic and non-diplomatic personnel of the Delegation of the European Union and the Delegation itself, upon the expiration of their 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. Now called, 'Value-Added Tax Certificate' (VC), under RMO No. 10-2019. 2. VEC No. 2018-073 , duly issued on 26 February 2018, and valid until 26 February 2020 .