ITAD Ruling No. 001-00

January 5, 2000 ITAD RULING NO. 001-00 Section 106 Section 108 206-93 Embassy of the Lao People's Democratic Republic Manila, Philippines Gentlemen : This refers to your Note No. 189/ALM.99 dated November 26, 1999, which was referred to this Office by the Department of Foreign Affairs requesting for the issuance of a Tax Exemption Certificate for the rental charges on room accommodation at the Manila Westin Plaza Hotel for the Lao delegation to the 3rd ASEAN Informal Summit held from November 24 to 28, 1999. In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations pertinent portion of which reads: "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 the goods and services xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value-added tax (VAT) on its local purchase of goods and services. In other words, purchases by the Embassy of the Lao Peoples Democratic Republic of goods and/or services shall be subject to the value-added tax prescribed under Sections 106 and 108, both of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, this Office may grant tax exemption to your embassy since your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling 206-93 dated May 11, 1993). cdlex Hence, the Embassy of the Lao Peoples Democratic Republic is entitled to VAT exemptions on their local purchase of goods and/or services. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group