Embassy of the People's Republic of China

October 17, 2019 ITAD BIR RULING NO. 035-19 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Embassy of the People's Republic of China 4896 Pasay Road, Dasmarias Village 1221 Makati City Gentlemen : This refers to your request, indorsed by the Department of Foreign Affairs, Office of Protocol (DFA-OP), for the renewal of the Value-Added Tax (VAT) Exemption Certificate (VEC) 1 of your diplomatic personnel on local purchase of goods and services for their personal use. cHaCAS 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 12 September 2019, and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated 18 September 2019, the Philippine Embassy, its diplomatic and non-diplomatic personnel, enjoy VAT exemption privileges in Beijing, China through reimbursement/refund , subject to the following limitations: 1. To avail of exemption, the required minimum amount of purchase per receipt (inclusive of taxes) is RMB800 (approximately Php5,553.06) on purchase of goods, and RMB300 (approximately Php2,082.40) on purchase of services; 2. There is no minimum amount or limitation for purchase of utilities and petroleum products ; 3. The ceiling for the total amount of tax refund that can be claimed, per year, on PERSONAL purchases of embassy personnel is RMB180,000 per person (approximately Php1,249,440.00) , exclusive of motor vehicle and house rental; and 4. There is NO ceiling for the total amount of tax refund that can be claimed per year, on OFFICIAL purchases of the embassy. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy of the People's Republic of China, its diplomatic and non-diplomatic personnel in the Philippines are entitled to VAT exemption privileges through reimbursement/refund , and not through point-of-sale basis. Hence, the expired VAT Certificates of your diplomatic personnel shall not be renewed anymore. Accordingly, the Embassy of the People's Republic of China, (including the Consulate Offices in Davao and Cebu) its diplomatic and non-diplomatic personnel 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 Revenue Memorandum Order (RMO) No. 10-2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Renamed as VAT Certificate (VC) under RMO 10-2019.