ITAD Ruling No. 060-00

March 15, 2000 ITAD RULING NO. 060-00 Section 106 Section 107, 108 ITAD 1-00 Royal Embassy of Cambodia Manila, Philippines Gentlemen : This refers to your Note Verbale E.A. 06/2000 dated January 19, 2000 which was referred to this Office by the Department of Foreign Affairs requesting for the issuance of a value-added tax (VAT) Exemption Certificate. prcd 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 their local purchase and importation of goods. In other words, purchase and importation by the Royal Embassy of Cambodia of goods and services shall be subject to the value-added tax prescribed under Section 106, 107 and 108 of the National Internal Revenue Code of 1997. LibLex However, under the principle of reciprocity, since your Government allows tax exemption to the Philippine Embassy on its purchase and importation of goods pursuant to Articles 58 (Non-Taxable Supplies for Diplomatic Missions and International Organizations) and 74 (Refunds to Diplomatic Missions and International Organizations) of your Law on Taxation and in reference to Department of Foreign Affairs (DFA) Office of Protocol Indorsement letter no. 3734, this Office may likewise grant tax exemption to your embassy on its purchase and importation of goods under similar conditions with those stated under Article 58 and 74 of your Law on Taxation (ITAD No. 1-00 dated January 5, 2000). Hence, the Royal Embassy of Cambodia is entitled to VAT exemptions on its local purchase and importation of goods as abovestated. However, the VAT exemption of the official personnel of your Embassy is only limited to their importation of goods for personal use and does not include the purchase of local goods as no similar exemption on purchase of local goods is granted to Embassy personnel under Article 74 of your Law on Taxation. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group VAT EXEMPTION CERTIFICATE No. 2000- ______ This is to certify that ____________________ the ROYAL EMBASSY OF CAMBODIA is exempted from value-added tax (VAT) on its purchase and importation of goods in the Philippines in accordance with the principle of reciprocity and pursuant to ITAD No. ___________ dated ______________. To date, the Kingdom of Cambodia allows similar exemption to the Philippine Embassy on its purchase and importation of goods in their country pursuant to the provisions of the Law on Taxation of the Kingdom of Cambodia and in reference to Department of Foreign Affairs (DFA) Office of Protocol Indorsement letter no. 3734. However, the exemption is limited to those goods pursuant to the provisions of Article 58 (Non-Taxable Supplies for Diplomatic Missions and International Organizations) and 74 (Refunds to Diplomatic Missions and International Organizations) of the Law on Taxation of the Kingdom of Cambodia. llcd This certification is being issued based on the foregoing and shall be valid until December 31, 2000. (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group Date of Issue: ________________