ITAD Ruling No. 015-99

August 6, 1999 ITAD RULING NO. 015-99 Sec. 106 Sec. 108 Embassy of Israel 23rd Floor Trafalgar Plaza 105 H.V. dela Costa Street Salcedo Village, Makati City Gentlemen : This refers to your letter dated April 14, 1999 which was referred to this Office by the Department of Foreign Affairs relative to your request for exemption from the value-added tax (VAT) on your local purchases of goods and services in the Philippines. LexLib 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 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, under the principle of reciprocity, this Office may grant tax exemption to the Embassy of the State of Israel or its personnel on their local purchases of goods and 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 purchase of goods and services in your country. Hence the local purchase of goods and services by your Embassy is exempt from the value-added tax. LexLib Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group