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TITLE II presence abroad with a definite intention

to reside therein.
TAX ON INCOME
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(As Last Amended by RA No. 10653) (2) A citizen of the Philippines who
leaves the Philippines during the taxable
CHAPTER I- DEFINITIONS year to reside abroad, either as an
immigrant or for employment on a
SEC. 22. Definitions. - When used in this permanent basis.
Title:
(3) A citizen of the Philippines who works
(A) The term 'person' means an individual, a and derives income from abroad and
trust, estate or corporation. whose employment thereat requires him
to be physically present abroad most of
(B) The term 'corporation' shall include the time during the taxable year.
partnerships, no matter how created or
organized, joint-stock companies, joint (4) A citizen who has been previously
accounts (cuentas en participacion), considered as nonresident citizen and
association, or insurance companies, but who arrives in the Philippines at any time
does not include general professional during the taxable year to reside
partnerships and a joint venture or permanently in the Philippines shall
consortium formed for the purpose of likewise be treated as a nonresident
undertaking construction projects or citizen for the taxable year in which he
engaging in petroleum, coal, geothermal and arrives in the Philippines with respect to
other energy operations pursuant to an his income derived from sources abroad
operating consortium agreement under a until the date of his arrival in the
service contract with the Government. Philippines.
'General professional partnerships' are
partnerships formed by persons for the sole (5) The taxpayer shall submit proof to
purpose of exercising their common the Commissioner to show his intention
profession, no part of the income of which is of leaving the Philippines to reside
derived from engaging in any trade or permanently abroad or to return to and
business. reside in the Philippines as the case may
be for purpose of this Section.
(C) The term 'domestic', when applied to a
corporation, means created or organized in (F) The term 'resident alien' means an
the Philippines or under its laws. individual whose residence is within the
Philippines and who is not a citizen thereof.
(D) The term 'foreign', when applied to a
corporation, means a corporation which is (G) The term 'nonresident alien' means an
not domestic individual whose residence is not within the
Philippines and who is not a citizen thereof.
(E) The term 'nonresident citizen' means;
(H) The term 'resident foreign
(1) A citizen of the Philippines who corporation' applies to a foreign corporation
establishes to the satisfaction of the engaged in trade or business within the
Commissioner the fact of his physical Philippines.
(I) The term 'nonresident foreign (P) The term 'taxable year' means the
corporation' applies to a foreign corporation calendar year, or the fiscal year ending
not engaged in trade or business within the during such calendar year, upon the basis of
Philippines. which the net income is computed under this
Title. 'Taxable year' includes, in the case of a
(J) The term 'fiduciary' means a guardian, return made for a fractional part of a year
trustee, executor, administrator, receiver, under the provisions of this Title or under
conservator or any person acting in any rules and regulations prescribed by the
fiduciary capacity for any person. Secretary of Finance, upon recommendation
of the commissioner, the period for which
(K) The term 'withholding agent' means such return is made.
any person required to deduct and withhold
any tax under the provisions of Section 57. (Q) The term 'fiscal year' means an
accounting period of twelve (12) months
(L) The term 'shares of stock' shall include ending on the last day of any month other
shares of stock of a corporation, warrants than December.
and/or options to purchase shares of stock,
as well as units of participation in a (R) The terms 'paid or incurred' and 'paid
partnership (except general professional or accrued' shall be construed according to
partnerships), joint stock companies, joint the method of accounting upon the basis of
accounts, joint ventures taxable as which the net income is computed under this
corporations, associations and recreation or Title.
amusement clubs (such as golf, polo or
similar clubs), and mutual fund certificates. (S) The term 'trade or business' includes
the performance of the functions of a public
(M) The term 'shareholder' shall include office.
holders of a share/s of stock, warrant/s
and/or option/s to purchase shares of stock (T) The term 'securities' means shares of
of a corporation, as well as a holder of a unit stock in a corporation and rights to subscribe
of participation in a partnership (except for or to receive such shares. The term
general professional partnerships) in a joint includes bonds, debentures, notes or
stock company, a joint account, a taxable certificates, or other evidence or
joint venture, a member of an association, indebtedness, issued by any corporation,
recreation or amusement club (such as golf, including those issued by a government or
polo or similar clubs) and a holder of a political subdivision thereof, with interest
mutual fund certificate, a member in an coupons or in registered form.
association, joint-stock company, or
insurance company. (U) The term 'dealer in securities' means a
merchant of stocks or securities, whether an
(N) The term 'taxpayer' means any person individual, partnership or corporation, with
subject to tax imposed by this Title. an established place of business, regularly
engaged in the purchase of securities and
(O) The terms 'including' and 'includes', the resale thereof to customers; that is, one
when used in a definition contained in this who, as a merchant, buys securities and re-
Title, shall not be deemed to exclude other sells them to customers with a view to the
things otherwise within the meaning of the gains and profits that may be derived
term defined. therefrom.
(V) The term 'bank' means every banking obligations, or financing their own needs or
institution, as defined in Section 2 of the needs of their agent or dealer. These
Republic Act No. 337, [6] as amended, instruments may include, but need not be
otherwise known as the "General banking limited to bankers' acceptances, promissory
Act." A bank may either be a commercial notes, repurchase agreements, including
bank, a thrift bank, a development bank, a reverse repurchase agreements entered into
rural bank or specialized government bank. by and between the Bangko Sentral ng
Pilipinas (BSP) and any authorized agent
(W) The term 'non-bank financial bank, certificates of assignment or
intermediary' means a financial participation and similar instruments with
intermediary, as defined in Section 2(D)(C) of recourse: Provided, however, That debt
Republic Act No. 337, [7] as amended, instruments issued for interbank call loans
otherwise known as the "General Banking with maturity of not more than five (5) days
Act," authorized by the Bangko Sentral ng to cover deficiency in reserves against
Pilipinas (BSP) to perform quasi-banking deposit liabilities, including those between or
activities. among banks and quasi-banks, shall not be
considered as deposit substitute debt
(X) The term 'quasi-banking activities' instruments.
means borrowing funds from twenty (20) or
more personal or corporate lenders at any (Z) The term 'ordinary income' includes
one time, through the issuance, any gain from the sale or exchange of
endorsement, or acceptance of debt property which is not a capital asset or
instruments of any kind other than deposits property described in Section 39(A)(1). Any
for the borrower's own account, or through gain from the sale or exchange of property
the issuance of certificates of assignment or which is treated or considered, under other
similar instruments, with recourse, or of provisions of this Title, as 'ordinary income'
repurchase agreements for purposes of shall be treated as gain from the sale or
relending or purchasing receivables and exchange of property which is not a capital
other similar obligations: Provided, however, asset as defined in Section 39(A)(1). The
That commercial, industrial and other non- term 'ordinary loss' includes any loss from
financial companies, which borrow funds the sale or exchange of property which is not
through any of these means for the limited a capital asset. Any loss from the sale or
purpose of financing their own needs or the exchange of property which is treated or
needs of their agents or dealers, shall not be considered, under other provisions of this
considered as performing quasi-banking Title, as 'ordinary loss' shall be treated as
functions. loss from the sale or exchange of property
which is not a capital asset.
(Y) The term 'deposit substitutes' shall
mean an alternative from of obtaining funds (AA) The term 'rank and file employees'
from the public (the term 'public' means shall mean all employees who are holding
borrowing from twenty (20) or more neither managerial nor supervisory position
individual or corporate lenders at any one as defined under existing provisions of the
time) other than deposits, through the Labor Code of the Philippines, as amended.
issuance, endorsement, or acceptance of
debt instruments for the borrowers own (BB) The term 'mutual fund company' shall
account, for the purpose of relending or mean an open-end and close-end investment
purchasing of receivables and other
company as defined under the Investment (FF) The term 'long-term deposit or
Company Act. [8] investment certificate' shall refer to
certificate of time deposit or investment in
(CC) The term 'trade, business or the form of savings, common or individual
profession' shall not include performance of trust funds, deposit substitutes, investment
services by the taxpayer as an employee. management accounts and other
investments with a maturity period of not
(DD) The term 'regional or area less than five (5) years, the form of which
headquarters' shall mean a branch shall be prescribed by the Bangko Sentral ng
established in the Philippines by Pilipinas (BSP) and issued by banks only (not
multinational companies and which by non-bank financial intermediaries and
headquarters do not earn or derive income finance companies) to individuals in
from the Philippines and which act as denominations of Ten thousand pesos
supervisory, communications and (P10,000) and other denominations as may
coordinating center for their affiliates, be prescribed by the BSP.
subsidiaries, or branches in the Asia-Pacific
Region and other foreign markets. (GG) The term 'statutory minimum wage'
shall refer to the rate fixed by the Regional
(EE) The term 'regional operating Tripartite Wage and Productivity Board, as
headquarters' shall mean a branch defined by the Bureau of Labor and
established in the Philippines by Employment Statistics (BLES) of the
multinational companies which are engaged Department of Labor and Employment
in any of the following services: general (DOLE). [9]
administration and planning; business
planning and coordination; sourcing and (HH) The term 'minimum wage earner'
procurement of raw materials and shall refer to a worker in the private sector
components; corporate finance advisory paid the statutory minimum wage or to an
services; marketing control and sales employee in the public sector with
promotion; training and personnel compensation income of not more than the
management; logistic services; research and statutory minimum wage in the non-
development services and product agricultural sector where he/she is assigned.
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development; technical support and
maintenance; data processing and
communications; and business development.