Royal Embassy of Saudi Arabia

June 17, 2020 ITAD BIR RULING NO. 043-20 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Royal Embassy of Saudi Arabia 128 H.V. Dela Costa corner Sanchez Streets Salcedo Village 1227 Makati City Gentlemen : This refers to the Value-Added Tax (VAT) exemption on the local purchase of goods and services of the Royal Embassy of Saudi Arabia as referred to this Office by the Department of Foreign Affairs, Office of Protocol (DFA-OP). 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 20 January 2020, the Philippine Embassy in Riyadh, Saudi Arabia enjoys VAT exemption privileges on its official purchase of goods and services through reimbursement/refund subject to the minimum total amount of reimbursement of SAR 1000 (USD267.00) per claim. 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 Royal Embassy of Saudi Arabia is entitled to the same VAT exemption privilege through reimbursement/refund , and not through point-of-sale basis. CHTAIc Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue