ITAD Ruling No. 122-02

July 3, 2002 ITAD RULING NO. 122-02 Secs. 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling ITAD-206-93 Apostolic Nunciature 2140 Taft Avenue P.O. Box 3364 Manila Attention: H.E. Archbishop Antonio Franco Apostolic Nuncio Gentlemen : This has reference to your Embassy Note No. 6706 dated April 25, 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 favor of His Excellency Archbishop Antonio Franco, Apostolic Nuncio and Dean of the Diplomatic Corps in Manila. 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 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 Apostolic Nunciature 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 Apostolic Nunciature in favor of H.E. Archbishop Antonio Franco, Apostolic Nuncio in Manila 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