ITAD Ruling No. 133-03

August 26, 2003 ITAD RULING NO. 133-03 Sec 108 & 109 of the Tax Code 1997; Article 34, Vienna Convention BIR Ruling No. 206-93 Embassy of the Bolivarian Republic of Venezuela Unit 17 A, Multinational Bancorporation Centre, 6805 Ayala Avenue, Makati City Gentlemen : This has reference to your Note No. 293 dated August 6, 2003 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 value-added tax (VAT) on its local purchase 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 the Bolivarian Republic of Venezuela 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. Hence, the Embassy of the Bolivarian Republic of Venezuela is exempt from value added tax on its purchases 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