ITAD BIR Ruling No. 234-11

October 18, 2011 ITAD BIR RULING NO. 234-11 Sections 106 & 108, NIRC of 1997; Article 34, Vienna Convention on Diplomatic Relations Embassy of the Sovereign Military Order of Malta 908 Paragon Plaza, Edsa cor. Reliance Street Mandaluyong City Attention: H.E. Leonida L. Vera Ambassador Gentlemen : This refers to Note Verbal LLV/68/8-2011 dated August 3, 2011 forwarded to this Office by the Department of Foreign Affairs (DFA), regarding the request for the issuance of a Value-Added Tax (VAT) Exemption Certificate (VEC) in favour of the Embassy of the Sovereign Military Order of Malta in the Philippines. In reply, 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. DETACa As per the updated list of the DFA indorsed to this Bureau on April 1, 2011 submitted to this Bureau by the Office of Protocol of the DFA, the Philippine Embassy in the Sovereign Military Order of Malta enjoys VAT exemption privileges on the purchase of goods and services therein. Accordingly, the Sovereign Military Order of Malta is now included in the list of diplomatic missions and other entities entitled to VAT exemption in the Philippines on the basis of reciprocity. This Office, therefore, is of the opinion as it hereby rules that the Embassy of the Sovereign Military Order of Malta is exempt from VAT on its purchase of goods and services in the Philippines. ScCDET Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue