VAT Ruling No. 018-93

April 26, 1993 VAT RULING NO. 018-93 Section 99-1-88-018-93 Embassy of Indonesia Manila Attention: Mr . M . Talib Puspukusumo Counsellor (Economics) S i r s : This refers to your letter dated December 29, 1992 requesting for a copy of rules and regulations regarding VAT exemption of members of the diplomatic corps. cdta In reply, I have the honor to inform you that under Article 34 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1961, diplomatic agents 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; (b) dues and taxes on private immovable property situated in the territory of the receiving state, unless he holds it on behalf of the sending state for the purpose of the mission; (c) estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of Article 39; (d) dues and taxes on private income having its source in the receiving state and capital taxes on investments made in commercial undertakings in the receiving State; (e) charges levied for specific services rendered; (f) registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23. The tax exemptions of diplomatic agents/representatives do not include exemption for the indirect taxes such as the value-added tax, falling under paragraph (a) above. Such being the case, local purchases by the Embassy are subject to the value-added tax. However, importation of certain articles by the Embassy, or its personnel in accordance with Article 36(1) of the Vienna Convention reading: " Article 36 "1. The receiving state, shall, in accordance with such laws and regulations as it may adopt, permit entry of and grant exemption from all customs duties, taxes, and related charges other than charges for storage, cartage and similar services, on: llcd "(a) articles for the official use of the mission; "(b) articles for the personal use of a diplomatic agent or members of his family forming part of his household, including articles intended for his establishment. xxx xxx xxx" are exempt from the value-added tax. (see also Sec. 103(u), NIRC as amended by E.O. 273). Under the principle of comity of Nations, and pursuant to Revenue Regulations No. 10-89 dated December 6, 1989, local purchases by your embassy personnel in the Philippines are exempted from VAT upon a certification by the Department of Foreign Affairs that the Philippine Embassy personnel in your country enjoys the same exemption on their purchases. It is observed, however, that in the list furnished by the Department of Foreign Affairs, indicating the foreign embassies which enjoy VAT exemption on their local purchases, the Embassy of Indonesia is not included. Accordingly, before the issuance of a certification by the Department of Foreign Affairs to the effect that the Philippine Embassy, as well as its personnel likewise enjoy VAT exemption on their local purchases in Indonesia, this Office cannot confirm the VAT exemption on local purchases sought by the Indonesia Embassy for its personnel. cdtech Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner (Officer-in-Charge)