Embassy of Spain

May 28, 2020 ITAD BIR RULING NO. 039-20 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 the indorsement of the Department of Foreign Affairs, Office of Protocol (DFA-OP) dated 14 February 2020 for the issuance of an amended ruling confirming value-added tax exemption on local purchase of goods and services in favor of the Embassy of Spain and its diplomatic 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 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 DFA Matrix of VAT Privileges dated 06 February 2020, the Philippine Embassy and its diplomatic personnel in Madrid, Spain enjoy VAT exemption privileges on purchase of goods and services subject to the following limitations: ETHIDa EMBASSY DIPLOMATIC PERSONNEL VAT REFUND Goods, for its official use Office supplies which invoice must exceed EUR300.51 Utilities and services: water, gas, electricity and fuel supply, telephone and radio and telegraphic communication services provided to the premises of the diplomatic mission or consular posts, or to the residence of the head of a consular post, provided that, in this latter case, he/she is a career consular/officer Contracts shall always be entered into on behalf of the Embassy or Consulate and not in the name of the individual. If contracts are in the name of the Head of Mission or Consular Post , the amount of each invoice must exceed EUR240.40 . 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 DIRECT VAT EXEMPTION or POINT-OF-SALE 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); Building work , with or without materials directly entrusted by the corresponding foreign State to the contractor, for the construction, improvement, extension, refurbishment, conversation or repair exceeding EUR751.27 1200 liters of fuel and 30 liters of lubricant for cars with diplomatic license plates which are officially used by the Embassy 1200 liters of fuel and 30 liters of lubricant for cars with diplomatic license plates which are personally used by the diplomatic personnel 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 VAT exemption privileges similar as above-specified . Accordingly, your diplomatic personnel and the Embassy itself, may proceed to secure the necessary VAT exemption privileges 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. This ruling CANCELS and SUPERSEDES BIR Ruling No. ITAD-031-19 issued on 14 October 2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue