ITAD BIR Ruling No. 387-12

December 4, 2012 ITAD BIR RULING NO. 387-12 Host Country Agreement Between the Government of the Republic of the Philippines and the ASEAN Centre for Biodiversity; Revenue Regulations No. 2-98; BIR Ruling No. ITAD-232-11 Asean Centre for Biodiversity 3F, ERDB Bldg., Forestry Campus College Laguna, 4031 Philippines Attention: Rodrigo U. Fuentes Executive Director Gentlemen : This refers to BIR Ruling No. ITAD-232-11 dated October 14, 2011 in reply to your letter dated November 3, 2010, referred to this Office by the Department of Foreign Affairs, requesting, among others, confirmation on the exemption from taxes of ACB's Executive Director. In the said ruling, this Office ruled, to wit: "C. Exemption from taxes of ACB's Executive Director and its duly designated officials. Under Article VIII (1) (2) of the Host Country Agreement, it is provided that: 'ARTICLE VIII IMMUNITIES AND PRIVILEGES xxx xxx xxx 1. Immunities and Facilities Accorded to Officers and Staff of the ACB. 2. The Executive Director of the ACB shall enjoy in the Philippines the privileges, immunities, exemptions, and facilities accorded to ambassadors who are heads of diplomatic missions. He shall designate, for approval of the Government, the officials who, by reason of their responsibilities or their functions, shall enjoy in the Philippines the same privileges, immunities, exemptions, and facilities as are accorded to the ASEAN Secretariat. DTEIaC xxx xxx xxx' The Vienna Convention establishes the tax benefits granted to ambassadors and 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; (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.' (emphasis supplied) IHTaCE 'Article 36 1. The receiving State shall, in accordance with such laws and regulations as it may adopt, permit entry of and grant exemption from all customs duties, taxes, and related charges other than charges for storage, cartage and similar services, on: xxx xxx xxx (b) Articles for the personal use of a diplomatic agent or members of his family forming part of his household, including articles intended for his establishment. Since it is provided in the Host Country Agreement that the Executive Director of the ACB shall enjoy similar exemptions as that of the Ambassador, the foregoing provisions of the Vienna Convention consequently apply to ACB's Executive Director." It should be noted that the above-quoted portion of the subject ruling did not qualify as to the nationality of ACB's Executive Director. Under Article 38 of the Vienna Convention, it provides: "Article 38 1. Except insofar as additional privileges and immunities may be granted by the receiving State, a diplomatic agent who is a national of or permanently resident in that State shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions. 2. Other members of the staff of the mission and private servants who are nationals of or permanently resident in the receiving State shall enjoy privileges and immunities only to the extent admitted by the receiving State. However, the receiving State must exercise its jurisdiction over those persons in such a manner as not to interfere unduly with the performance of the functions of the mission. TIaDHE Thus, based on the above-quoted provision, it states that if a diplomatic agent is a national of or a permanent resident in the receiving State, then such diplomatic agent shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions. Thus, if the ACB Executive Director is a national of or permanently residing in the Philippines, then he or she does not enjoy tax exemption privileges in the Philippines, being the receiving State, but enjoys only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions. This ruling amends in part BIR Ruling No. 232-11 dated October 14, 2011, only insofar as it qualifies the exemption from taxes of ACB's Executive Director. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue