Embassy of Spain

October 14, 2019 ITAD BIR RULING NO. 031-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of Spain 27th Floor, Equitable Bank Tower 8751 Paseo de Roxas 1226 Makati City Gentlemen : This refers to your request, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), for Value-Added Tax Exemption on local purchase of goods and services in favor of your Embassy and diplomatic personnel. cHECAS 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 their 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 10 July 2019, and the DFA Matrix on VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 12 July 2019, the Philippine Embassy and its diplomatic personnel in Madrid, Spain enjoy VAT exemption privileges on purchase of goods and services through reimbursement/refund , subject to the following limitations: 1. The EMBASSY is entitled to VAT refund on local purchase of: a. Goods, for official use; b. Office supplies which invoice must exceed EUR300.51; c. Services and utilities which invoice must exceed EUR320.40; 2. The EMBASSY is entitled to direct VAT exemption on: a. Real Estate (delivery and lease of buildings or parts thereof and adjoining land, purchased or leased by foreign States to be used as headquarters of the diplomatic mission or consular posts or the residence of the Head of Mission or Career Consular Officers for the consular post); b. Building work or repair exceeding EUR751.27 3. The DIPLOMATIC PERSONNEL are entitled to VAT refund on local purchase of: a. GOODS (excluding utilities and services), with a minimum amount of EUR240.40 of purchase per invoice, and a maximum amount of EUR9,015.18 per quarter of the year. 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 Embassy of Spain 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 (except for the Embassy in connection with its headquarters as specified above). 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 Embassy of Spain still holds a valid VEC. 1 Hence, the embassy may still enjoy point-of-sale VAT exemption until the expiration date of the said VEC. Accordingly, your diplomatic personnel, 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. AHDacC Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. VEC No. 2019-002 , duly issued on 28 January 2019, and valid until 09 February 2020 .