ITAD Ruling No. 065-01

July 31, 2001 ITAD RULING NO. 065-01 Sec. 106, Sec. 108 & Sec. 149 BIR Ruling No. ITAD-206-93 DA-ITAD-065-01 Embassy of Australia 4/F Prince Building 117 Rada St., Legaspi Village Makati City Gentlemen : This has reference to your Note No. 20.84/1/01 dated May 17, 2001 referred to this Office by the Immunities and Privileges Division, Office of Protocol of the Department of Foreign Affairs (DFA), requesting for issuance of value added tax (VAT) exemption certificate for the Embassy and its staff. 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; aAHTDS "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 that Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of Austria 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 February 22, 2001 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. (BIR Ruling 206-93 dated May 11, 1993) Hence, the Embassy of Austria is exempt from value added tax and ad valorem taxes on its purchases of local goods and/or services. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group