ITAD BIR Ruling No. 139-14

July 23, 2014 ITAD BIR RULING NO. 139-14 Executive Order No. 31; Section 34, Vienna Convention Ms. Evelyn D. Austria-Garcia Assistant Secretary Office of Protocol Department of Foreign Affairs 2330 Roxas Blvd., Pasay City, 1300 Dear Assistant Secretary Garcia : This refers to Note No. 244-13 from the British Embassy and Note No. 410/13 from the Australian Embassy both dated 07 November 2013, indorsed by your Office, requesting confirmation that Mr. Trevor James Lewis of the British Embassy and Dr. David Harry Dutton of the Australian Embassy in Manila are not required to secure Tax Identification Number (TIN) as Trustees of the British Education, Inc. (BEI), in connection with BEI's registration with the Securities and Exchange Commission. Documents submitted show that Mr. Trevor James Lewis is posted as Deputy Head of Mission at the British Embassy, Manila, while Dr. David Harry Dutton, as Minister and Deputy Head of Mission at the Australian Embassy; that linked to their respective duties as diplomats, they also sit as Trustees of the BEI, a non-stock, non-profit educational corporation duly organized and existing under Philippine laws with office address at 36th Street, University Park, Bonifacio Global City, Taguig, Metro Manila; that Mr. Lewis and Dr. Dutton do not receive any compensation as Trustees nor any reimbursement as such for their transportation and attendance at meetings as a consequence of their function as Trustees to BEI; and that the By-Laws of BEI prohibits any Trustee from receiving any remuneration for their services rendered as Trustee to BEI. In reply, please be informed that Sections 1 and 2 of Executive Order (EO) No. 31 issued on 13 August 2001 provide that: AaSTIH "EXECUTIVE ORDER NO. 31 Amending Executive Order No. 98 dated April 28, 1999 by Exempting therefrom Diplomatic Missions and International Organizations as well as their Accredited Foreign Personnel xxx xxx xxx Section 1. Diplomatic Missions and International Organizations, as identified by the Department of Foreign Affairs, together with their accredited foreign personnel, are hereby exempted from the requirements of the Taxpayer Identification Number when they apply for any Government permit, license, clearance, official paper or document; Section 2. For the purpose of establishing the bona fides of such entities and individuals, it shall be sufficient that their request for above-named documentation is accompanied by the corresponding endorsement of the Department of Foreign Affairs, which shall include the official identity card issued by the Office of Protocol of the Department. . . ." In addition thereto, there is Article 34 of the Vienna Convention on Diplomatic Relations (Vienna Convention) dated 18 April 1961. It provides: "Article 34 A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: (a) Indirect taxes of a kind which are normally incorporated in the price of goods or services; (b) Dues and taxes on private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission; (c) Estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of article 39; (d) Dues and taxes on private income having its source in the receiving State and capital taxes on investments made in commercial undertakings in the receiving State; DTEcSa (e) Charges levied for specific services rendered; (f) Registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of article 23." Based on the foregoing, a qualified foreign personnel of an embassy, as indorsed by the DFA, with a copy of the personnel's official identity card issued by the Office of Protocol of the DFA, is not required to secure a TIN when applying for a government permit. Moreover, a diplomatic agent, again as indorsed by the DFA, is, in general, exempt from national taxes, that is, taxes imposed under the amended 1997 National Internal Revenue Code of the Philippines. However, by way of exception, dues and taxes on private income derived from commercial undertakings of a diplomatic agent in the Philippines are not exempt from taxes. In view thereof and considering that Mr. Lewis and Dr. Dutton receive no remuneration as Trustees of BEI, this Office is of the opinion and hereby rules that Mr. Trevor James Lewis , Deputy Head of Mission of the British Embassy in Manila, and Dr. David Harry Dutton , Minister and Deputy Head of Mission of the Australian Embassy, appointed Trustees of BEI, are not required to secure Tax Identification Number (TIN) for purposes relative to BEI's registration with the Securities and Exchange Commission pursuant to EO 31. This ruling is issued on the basis of the foregoing facts, as represented. However, if upon investigation it shall be disclosed that the actual 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