ITAD Ruling No. 095-04

August 31, 2004 ITAD RULING NO. 095-04 Sec 108 & 109 of the National Internal Revenue Code of 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of Papua New Guinea 3rd Floor, Corinthian Plaza Bldg. Paseo de Roxas, Legaspi Village Makati City Gentlemen : This has reference to your Note No. 27/2004 dated May 31, 2004 referred to this Office by the Immunities and Privileges Division, Office of Protocol of the Department of Foreign Affairs (DFA), requesting for the issuance of value-added tax (VAT) exemption certificate for the embassy. 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 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, applying the principle of reciprocity, this Office may grant exemption to the Embassy of Papua New Guinea or its personnel on their local purchases of goods and/or 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 purchases of goods and services in your country. ADcSHC Hence, the Embassy of Papua New Guinea is exempt from VAT on its purchase of local goods and/or services. ( BIR Ruling No. 206-93 dated May 11, 1993 ) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service