Embassy of the Lao People's Democratic Republic

July 23, 2021 ITAD BIR RULING NO. 038-21 Principle of Reciprocity Embassy of the Lao People's Democratic Republic 14D Chatham House Condominium 116 Valero corner Rufino Street, Salcedo Village 1227 Makati City 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 Lao People's Democratic Republic in Manila and its qualified embassy personnel. 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, however, subject to indirect taxes of a kind which are normally incorporated in the price of goods or services ( e.g. , VAT). Nevertheless, on the basis 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 a 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 letter of the Office of Protocol of the Department of Foreign Affairs (DFA-OP) dated July 6, 2021, and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts dated July 6, 2021, the Philippine Embassy , its diplomatic and non-diplomatic personnel in Vientiane, Laos enjoy VAT exemption privileges on the local purchase of goods and services including the purchase of motor vehicles therein by way of point-of-sale. Accordingly, the Embassy of the Lao People's Democratic Republic is now included in the list of diplomatic missions and other entities entitled to VAT exemption in the Philippines on the basis of reciprocity. Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Embassy of the Lao People's Democratic Republic, its diplomatic and non-diplomatic personnel in Manila are entitled to the same VAT exemption privilege by way of point-of-sale on the purchase of goods and services, including the local purchase of motor vehicles, in the Philippines. aCIHcD Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue