ITAD Ruling No. 078-00

July 4, 2000 ITAD RULING NO. 078-00 Sections 106-108 ITAD 1-00 Embassy of the Sovereign Military Order of Malta 6th Floor, Cattleya Condominium Building 235 Salcedo St., Legaspi Village 1229 Makati City Attention: Enrique P . Syquia Ambassador Gentlemen : This refers to your letter No. 076 dated August 16, 1999 requesting for the issuance of a value-added tax (VAT) Exemption Certificate. 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 cdlex xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT on their local purchase and importation of goods. In other words, purchase and importation by the Embassy of the Sovereign Military Order of Malta of goods and services shall be subject to the VAT prescribed under Section 106, 107 and 108 of the National Internal Revenue Code of 1997. However, under the principle of reciprocity, and since your Government allows tax exemption to the Philippine Embassy on its purchase and importation of goods in reference to Department of Foreign Affairs (DFA) Office of Protocol Indorsement Letter no. 3589, this Office may likewise grant tax exemption to your embassy on its purchase and importation of goods. Hence, the Embassy of the Sovereign Order of Malta is entitled to VAT exemptions on its local purchase and importation of goods as above-stated. Very truly yours, (SGD.) LILIAN B. HEFTI OIC, Deputy Commissioner Legal and Inspection Group