ITAD BIR Ruling No. 165-14

September 9, 2014 ITAD BIR RULING NO. 165-14 Article 34, Vienna Convention on Diplomatic Relations Royal Danish Embassy 21F, Philamlife Tower 8767 Paseo de Roxas, Makati City Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Royal Danish Embassy in Manila and its qualified embassy personnel. In this regard, please be informed that while Article 34 of the Vienna Convention on Diplomatic Relations of 1961 exempts 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 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. CDTSEI As per the July 15, 2014 letter of the Office of Protocol of the Department of Foreign Affairs on the updates from the Philippine Foreign Service Posts, VAT refund for a minimum amount of DKK1500 is accorded to the Philippine Embassy in Oslo which has jurisdiction over Denmark, and for a minimum amount of DKK750 to the diplomatic and non-diplomatic personnel of the embassy, paid on goods and services (except gift certificates, admission fees for entertainment, membership fees for clubs and association, and medicines) , and on purchase of brand new motor vehicles thereat. Accordingly, the Royal Danish Embassy is now included in the list of diplomatic missions and other entities entitled to VAT exemption in the Philippines on the basis of reciprocity. Based thereon, the Royal Danish Embassy, 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, and motor vehicles locally purchased in the Philippines, on the basis of reciprocity. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue