ITAD Ruling No. 047-02

April 15, 2002 ITAD RULING NO. 047-02 Sec. 108 & 109 of the Tax Code 1997 Article 34, Vienna Convention BIR Ruling DA-ITAD-119-01 New Summit International, Inc. Unit 20, Manila Polo Club Townhouse McKinley Road, Forbes Park Makati City Attention: Nelia Yulo Pasco Authorized Representative Gentlemen : This refers to your letter dated September 4, 2001 requesting for exemption from value-added tax on the rental payment of Mr. Abdulaziz Al-Shehab, Consul of the Embassy of State of Qatar. 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 value added tax (VAT) and ad valorem taxes on their local purchases of goods and services. In other words, purchases by the Embassy of goods and/or services shall be subject to the value added tax prescribed under Section 106 and 108, and ad valorem taxes under Section 149, both the National Internal Revenue Code of 1997. SaCIAE However, applying the principle of reciprocity, this Office may grant exemption to the Embassy of Qatar and its personnel on their local purchase of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs dated September 4, 2001 that the Government of Qatar allows similar exemption to Philippine Embassy and its personnel on the purchase of goods and services in Qatar. Hence, the rental payment of Mr. Abdulaziz Al-Shehab, Consul of Embassy of State of Qatar, is exempt from value-added tax. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service