VAT Ruling No. 006-97

January 17, 1997 VAT RULING NO. 006-97 Sec. 103 (u); 206-93; 006-97 Embassy of Romania Manila, Philippines Attention: Ambassador Ioan Emil Vasiliu Ambassador Extraordinary and Plenipotentiary Gentlemen : This refers to your Note No. 1294/ 31.12.1996 dated December 31, 1996 which informed this Office that the Ministry of Foreign Affairs of Romania through the VN AO4-1025/26.06.1996 addressed to the Embassy of the Republic of the Philippines in Bucharest already approved the exemption of VAT for all the purchases of the Philippine Embassy personnel in Romania starting on April 1, 1995 (retroactive). 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 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 100 (a) and 102 (a), both of the Tax Code, as amended by Executive Order. However, under the principle of reciprocity, this Office may grant tax exemption to the Romanian Embassy in Manila or its personnel on value-added taxes provided that you can submit to the Commissioner of Internal Revenue or her duly authorized representative a copy of the special legislation or international agreement showing that the Government of Romania allows similar tax exemption to the Philippine Embassy and its personnel on their purchases of goods and services in that territory (BIR Ruling No. 206-93 dated May 11, 1993). Per your said Note dated December 31, 1996 copy furnished the Office of Protocol, Department of Foreign Affairs, Manila and the Secretary of Finance Hon. Roberto F. De Ocampo, all purchases by Philippine Embassy personnel in Romania are exempt from VAT; and that exemption from value-added taxes are accorded to diplomatic missions and personnel in Romania. cdta Such being the case, the Embassy of Romania in the Philippines is exempt from VAT on similar transactions. Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant/Director Legal Service Chairman, VAT Review Committee