ITAD BIR Ruling No. 079-10

December 20, 2010 ITAD BIR RULING NO. 079-10 Article 23, Vienna Convention on Diplomatic Convention; BIR Ruling No. 120-91; BIR Ruling No. DA-ITAD-088-05 Embassy of the Republic of Singapore No. 505, Rizal Drive Fort Bonifacio, Bonifacio Global City, Taguig City Gentlemen : This refers to your Note Verbale No. 088-2010 dated September 9, 2010, which was indorsed to this Office by the Department of Foreign Affairs, requesting tax exemption on the sale by the Embassy of Singapore of its Old Chancery located at the 35th Floor, Tower I, The Enterprise Center, 6766 Ayala Avenue corner Paseo de Roxas, Makati City, Philippines, and covered by Condominium Certificate of Title No. 90922 issued by the Registry of Deeds of Makati City on July 28, 2005. In reply, please be informed of Article 23 of the Vienna Convention on Diplomatic Relations (Convention) adopted on April 18, 1961, pertinent portion of which reads: "Article 23 1. The sending State and the head of the mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased, other than such as represent payment for specific services rendered. 2. The exemption from taxation referred to in this article shall not apply to such dues and taxes payable under the law of the receiving State by persons contracting with the sending State or the head of the mission." DaIACS It is clear from the aforequoted provisions of the Convention that the Embassy of the Republic of Singapore is exempt from the capital gains tax on the sale of its Old Chancery in the Philippines. On the other hand, considering that the documentary stamp tax is payable by either party to the contract and that under the Convention the Embassy of the Republic of Singapore is exempt from all taxes in respect of the premises of the mission, i.e. , capital gains tax, then, it is likewise exempt from the documentary stamp tax due on the adverted sale. (BIR Ruling No. 088-05 dated August 30, 2005) However, it is provided that whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. (Sec. 173, Tax Code of 1997, as amended) Accordingly, the buyer of the Embassy of the Republic of Singapore real property shall be the party directly liable for the payment of the documentary stamp tax thereon. With respect to your request for exemption from the real estate tax, you may address your query to the Bureau of Local Government-Finance, which has jurisdiction on the said matter. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue