VAT Exemption for Embassies and Personnel

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BIR REVENUE MEMORANDUM ORDER NO. 81-99: VAT Exemption for Embassies and Personnel

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Title Source: Supreme Court: VAT Exemption for Embassies and Personnel

Law: Bir Revenue Memorandum Order No. 81-99

Decision Date: Oct 8, 1999

Beethoven L. Rualo's directive streamlines the process for qualified embassies and their personnel to obtain Value Added Tax (VAT) Exemption Certificates for purchases in the Philippines, transferring responsibility to the International Tax Affairs Division and establishing guidelines for application and renewal based on reciprocity.

Objective of the Order

To provide clear guidelines for the proper processing and issuance of VAT Exemption Certificates (VEC) to qualified embassies and their personnel.
Aims to facilitate VAT exemption on purchases of goods and services in the Philippines for eligible entities.

Filing and Processing of Requests

All VAT exemption requests and VEC issuance applications must be initially filed with the DFA’s Office of Protocol.
DFA Office of Protocol forwards these requests to the ITAD for appropriate action within BIR.
Requests are preferably filed in the first quarter of the calendar year to ensure timely processing.

Issuance of VAT Exemption Certificates

ITAD issues a VEC based on an official BIR ruling and subject to the principle of reciprocity as confirmed by the DFA’s Office of Protocol.
If no previous ruling exists for an embassy, the request is treated as a request for a ruling.
Once a ruling is issued, subsequent certifications are based on that ruling unless it becomes ineffective.

Validity and Effectiveness of Rulings and Certificates

The ruling and resultant exemption remain valid as long as the embassy remains on DFA’s updated list of diplomatic missions entitled to VAT exemptions on the basis of reciprocity.
Only one VEC will be issued per embassy to cover all VAT-exempt transactions.
The VEC is valid within the year of issuance and must be renewed annually upon application by the embassy.

Changes in Diplomatic Status and VAT Exemption

If an embassy is removed from the exemption list within a calendar year, it retains VAT exemption for the remaining part of that year.
However, the embassy loses its VAT exemption status for the subsequent year unless reinstated on the list by the DFA.

Effectivity of the Order

The order takes effect immediately as of October 8, 1999.
Signed and adopted by Commissioner Beethoven L. Rualo of the Bureau of Internal Revenue.

END