ITAD Ruling No. 105-02

May 28, 2002 ITAD RULING NO. 105-02 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-206-93 Embassy Of Peru Unit 1604, No. 139, Corporate Center, No. 139 Valero St. Salcedo Village, Makati City Gentlemen : This has reference to your Embassy Note No. 073/02 dated February 27, 2002 referred to this Office by the Department of Foreign Affairs, Office of Protocol, requesting for the issuance of 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 due 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 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, of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant VAT exemption to the Embassy of Peru or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs as of September 4, 2001 that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of goods and services for the official use of the Embassy of Peru is exempt from the value-added tax. (BIR Ruling No. 206-93 dated May 11, 1993) Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service