Delegation of the European Union

September 23, 2020 ITAD BIR RULING NO. 062-20 Principle of Reciprocity; Revenue Memorandum Order No. 10-2019 Delegation of the European Union to the Philippines 30th Floor, RCBC Plaza 6819 Ayala Avenue 1200 Makati City Gentlemen : This refers to the indorsement of the Department of Foreign Affairs, Office of Protocol (DFA-OP) dated July 22, 2020 for the amendment of BIR Ruling No. ITAD-030-19 on the value-added tax exemption privileges of the Delegation of the European Union to the Philippines and its qualified personnel on local purchase of goods and services in the Philippines. In reply, please be informed that while the Vienna Convention on Diplomatic Relations of 1961 exempts diplomatic missions ( i.e. , embassies and consulates) and 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). Under the principle of reciprocity, however, this Office may grant tax privileges to a foreign embassy and to its members on local purchases of goods and services, provided that they can submit to the Commissioner of Internal Revenue a proof that the government of the concerned embassy allows similar tax privileges to the Philippine Foreign Service Post (PFSP) and its personnel on purchases of goods or services in their country. As per the Indorsement of the DFA-OP dated 22 July 2020, and the DFA Matrix on VAT Privileges Enjoyed by the PFSPs dated 20 July 2020, the Philippine Embassy, its diplomatic and non-diplomatic personnel in Brussels, Belgium, where the headquarters of the European Union is located and considered as its de facto capital, enjoy VAT exemption privileges on purchase of goods, services and utilities through reimbursement/refund , subject to the following limitations: For the EMBASSY Purchase of supplies and provision of services for the official use/benefit of the Embassy with a minimum amount of 125.00 exclusive of VAT (based on prevailing BSP exchange rate) per delivery or per service, such as: SaCIDT a) Office furniture and equipment; b) Supplies of fuel to the Chancery/Official residence; c) Telecommunications and cable television appliances and equipment; d) Office and Chancery supplies; e) Rental of cars and other means of transport provided that the cost is borne by the mission; f) Provision of services (repair, maintenance, etc.) relating to these vehicles; g) Language classes for embassy personnel where fees are paid by the Embassy; h) Food items and provision of meals for official receptions in the Chancery/Official residence during events; and i) Goods for domestic or private use; j) Acquisition and/or lease of real property for Post's official premises provided a VAT-exemption ruling was secured from the Bureau of Internal Revenue; k) Purchase of wines and alcohol with the following annual limits: 750L of alcohol (22 alcohol or more) and wine (less than 22 alcohol) For the DIPLOMATIC and NON-DIPLOMATIC PERSONNEL Purchases of movable property and provision of services for the personal use/benefit of the diplomatic and non-diplomatic personnel with a minimum amount of 125.00 exclusive of VAT (based on prevailing BSP exchange rate) per delivery or per service, except for the following: a) buildings; b) building work; c) supplies of water, gas, electricity and oil; d) deliveries of general food items; e) supplies of food and drink consumed on the premises; f) costs of accommodation in a hotel; g) telephone connections and communications; h) manufactured tobacco; i) rental of means of transport; j) the purchase of certain means of transport; k) services provided by travel agencies; l) banking and financial transactions; m) works of art; n) collections and antiques; o) firearms; and p) services relating to non-exempted goods. Lease of real property; Purchase of wines, alcohol and tobacco with the following annual limits: a) 60L of alcohol (22 alcohol or more); b) 300L of wine (less than 22 alcohol); and c) 5000 units of cigarettes and cigars. cHECAS Based on the foregoing, this Office is of the opinion as it hereby rules that, applying the principle of reciprocity, the Delegation of the European Union to the Philippines, its diplomatic and non-diplomatic personnel are entitled to the same VAT exemption privileges through reimbursement/refund . Accordingly, the Delegation of the European Union, its diplomatic and non-diplomatic personnel may proceed to secure the necessary VAT reimbursement/refund on purchases of goods and services in the Philippines subject only to the aforementioned limitations, and following the guidelines set forth in Revenue Memorandum Order No. 10-2019. This ruling CANCELS and SUPERSEDES BIR Ruling No. ITAD-030-19 issued on October 14, 2019. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue