ITAD Ruling No. 011-00

January 19, 2000 ITAD RULING NO. 011-00 Section 106 Section 108 206-93 Royal Belgian Embassy Makati City, Philippines Gentlemen : This refers to your Note Verbale No. A.72/871 dated October 28, 1999 requesting for the issuance of an updated Certificate of Tax Exemption from value-added tax (VAT) on your local purchase of goods and rental services. In reply, please be informed that pursuant to Article 43 of the Vienna Convention On Diplomatic Relations pertinent portions 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 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, under the principle of reciprocity, this Office may grant exemptions to your 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 dated October 4, 1999 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling No. 206-93 dated May 11, 1993). Hence, the Royal Belgian Embassy is entitled to VAT exemptions on their purchase of local goods and/or services. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group