ITAD BIR Ruling No. 129-16

August 26, 2016 ITAD BIR RULING NO. 129-16 Principle of Reciprocity Embassy of Israel 10/F Avechares Center 1132 University Parkway North Bonifacio Global City, Taguig City 1634 Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Embassy of Israel in Manila and its qualified embassy personnel. In this regard, please be informed that Article 23 of the Vienna Convention on Diplomatic Relations of 1961 (VCDR) exempts diplomatic missions from all national taxes in respect of the premises of the mission. Moreover, Article 34 of the same VCDR exempts diplomatic agents from all dues and taxes, personal or real, national, regional or municipal. However, diplomatic agents are 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, this Office may grant VAT exemption to the embassy of a foreign state and to the members of diplomatic missions on their local purchases of goods and services, provided that they can submit to the Commissioner of Internal Revenue proof that the said foreign government allows similar tax exemptions to the Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. As per the 26 May 2016 letter of the Office of Protocol of the Department of Foreign Affairs on the updates from the various Philippine Foreign Service Posts, the Philippine Embassy in Tel Aviv is accorded the following VAT exemption privileges: For the embassy - VAT refund on OFFICIAL purchase of goods and services (inclusive of utilities) - VAT exemption on OFFICIAL purchase of motor vehicle - VAT exemption on fuel ( 600 Liters only, for official cars of the embassy and the head of mission) For diplomatic personnel - VAT refund on personal purchase of goods and services (inclusive of utilities) BUT for a minimum amount of USD75 per quarter ; and USD300 per year , PER FAMILY (based on prevailing BSP rate on the date of the refund process) AScHCD - VAT exemption on purchase of motor vehicle - VAT exemption on fuel (450 liters only) For non-diplomatic personnel ONLY WITHIN THE FIRST SIX (6) MONTHS UPON ARRIVAL VAT refund on personal purchase of goods and services (inclusive of utilities) BUT only for a minimum amount USD150 (if single) and USD250 (per family) VAT exemption on purchase of motor vehicle VAT exemption on fuel (150 liters only) Based thereon, the Embassy of Israel, its diplomatic and non-diplomatic personnel in Manila may now proceed to secure the necessary VAT exemption on the purchase of specific goods and services (inclusive of utilities) , and motor vehicles locally purchased in the Philippines, within the above-cited restrictions, on the basis of reciprocity. Please be guided accordingly. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue