ITAD Ruling No. 010-04

February 16, 2004 ITAD RULING NO. 010-04 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Royal Norwegian Embassy 21/F, Petron Mega Plaza Bldg. 358 Sen. Gil Puyat Avenue, Makati City Gentlemen : This has reference to your Note No. 2/04 dated January 16, 2004 referred to this Office by the Immunities and Privileges Division, Office of Protocol of the Department of Foreign Affairs (DFA), requesting for the issuance of value-added tax (VAT) exemption certificate for the Embassy and its officials. 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 goods or services; "xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that Embassy 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, applying the principle of reciprocity, this Office may grant exemption to the Royal Norwegian Embassy or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to Philippine Embassy personnel on their purchases of goods and services in your country. Hence, the Royal Norwegian Embassy is exempt from value-added tax on its purchases of local goods and/or services. (BIR Ruling No. 206-93 dated May 11, 1993) DHcTaE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service