ITAD BIR Ruling No. 213-13

August 2, 2013 ITAD BIR RULING NO. 213-13 Principle of Reciprocity Embassy of the Sultanate of Oman 2215 Paraiso Street Dasmarias Village Barangay Dasmarias, Makati City 1221 Gentlemen : This refers to the request for value-added tax (VAT) exemption on the local purchase of goods and services by the Embassy of the Sultanate of Oman 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. cSIACD 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. As per the 19 July 2013 letter of the Office of Protocol of the Department of Foreign Affairs the Philippine Embassy in Muscat has reported that the Government of Sultanate of Oman does not impose VAT on the purchase of goods and services, including the purchase and importation of motor vehicles. Based thereon, the Embassy of the Sultanate of Oman, 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