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BIR Ruling 033 00
BIR Ruling 033 00
Gentlemen :
This refers to your letter dated November 23, 1999 requesting for a
clarification or ruling with regard to the proper tax classification of your
employees assigned abroad thru Secondment Agreement with your overseas client.
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Consequently, and as stated in the Secondment Agreement, the manhour
spent by the overseas' assignees are billed to client at an agreed manhour billing
rate based on their position level and salaries; that the client then remits the
payment and TIC converts the same to pesos through the Philippine Banking
System; that, in effect, of client of JGC Corporation is actually the one paying the
salaries of overseas' assignees through TIC; that for income tax purposes, all your
employees who are assigned overseas for at least 183 days in a taxable year were
classified as non-residents since the situs of income whether within or without was
determined by the place where the service was rendered; that the income thus
earned, even if paid locally, were taxed based on the preferential rates of 1-2-3%
before the taxable year 1998; that with the implementation of the Comprehensive
Tax Reform Program as of January 1, 1998, you now seek clarifications as the
proper tax treatment of your employees assigned abroad.
In reply, please be advised that Section 23(C) of the Tax Code of 1997
which took effect on January 1, 1998, provides as follows:
Corollary thereto, Section 22(E)(3) of the same Code provides one of the
definitions of the term 'non-resident citizen' of the Philippines, viz:
"(3) A citizen of the Philippines who works and derives income from
abroad and whose employment thereat requires him to be physically present
abroad most of the time during the taxable year."
You may, therefore, recognize the income tax exemption of your employees
Copyright 2014 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia 2013 2
assigned abroad based on either of the foregoing premises.
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