INCOME TAXATION

TAX001
SITUS OF TAXPAYERS
What is Situs?
the place where an authority
has the right to impose and
collect taxes.
Place of Taxation
Kinds of Taxpayers

Citizen - Filipino
Aliens - Foreigners
Citizens under Article 4 Section 1 - 1987
Constitution
Those who are citizens of the Philippines at the time of
the adoption of this Constitution.
Those whose fathers or mothers are citizens of the
Philippines.
Those born before January 17, 1973, of Filipino
mothers, who elect Philippine citizenship upon
reaching the age of majority (21 prior to RA6809).
Those who are naturalized in accordance with law.
Dual Citizenship Issue
Article 4 Section 5 of 1987 Constitution states that

Dual allegiance of citizens is inimical to the

national interest and shall be dealt with by law.
Answer to this issue:

RA9225 - Citizenship Retention and

Re-acquisition Act of 2003
CASE 1
Ms. X was born in 1974 in Australia of
an Australian father, and a mother who
was a Filipino. Her mother applied for
Australian citizenship 3 months before
Ms. X’s birth, and she then became a
naturalized Australian citizen. Is Ms. X
a natural-born Filipino?
CASE 2
Mr. X was born in America of a foreign
father and a Filipino mother. Her
mother applied for American
citizenship a month after Mr. X’s birth,
then became a naturalized American
citizen. Is Mr. X a natural-born
Filipino?
CASE 3
Ms. Y was born on 16 January 1973,
of a Filipino mother and a foreign
father. She did not elect Filipino
citizenship when she turned 21. Can
she be considered a natural-born
Filipino?
CASE 4
Mr. Z was born of a Filipino mother
and an American father on 16 January
1973. Upon reaching the age of
majority, he chose to elect his Filipino
citizenship. Can he be considered a
natural-born Filipino?
Website for List of Countries that
allow dual citizenship
https://www.henleyglobal.com/
citizenship-investment/dual-
citizenship
Non-Resident Citizens - RA8424
Section 22 par. E
A citizen of the Philippines who establishes to the
satisfaction of the Commissioner the fact of his physical
presence abroad with a definite intention to
reside therein.
A citizen of the Philippines who leaves the Philippines
during the taxable year to reside abroad, either as an
immigrant or for employment on a permanent
basis.
Non-Resident Citizens - RA8424
Section 22 par. E
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. (at least 183 days)
Situs of Citizens under RA8424
Section 23
A citizen of the Philippines residing therein is
taxable on all income derived from sources
within and without the Philippine

A nonresident citizen is taxable only on

income derived from sources within the
Philippines
CASE 1
Manny, a Filipino businessman,
went on a business trip
abroad and stayed there
most of the time during the
year.
CASE 2
Kyla, a Filipino professional
singer, held a series of concerts
in various countries around the
world during the current taxable
year. She stayed abroad most of
the time during the year.
CASE 3
Efren, a Filipino “cue” artist went
to Canada during the taxable year
to train and participate in the
world cup of pool. He stayed there
most of the time during the year.
CASE 4
Due to his expertise, Engr. Pedro D. Magiba
(a freelancer) was hired by a foreign
petroleum contractor in Thailand to provide
technical assistance for two months from
February to March. He was hired again for
the months of June-July and October-
December of the same taxable year.
Resident Alien - RA8424 Section 22
par. F
An individual whose residence is within
the Philippines and who is not a citizen
thereof. (EXTENDED STAY)
An alien who is present in the
Philippines for at least 2 years is a
resident alien.
Non-Resident Alien - RA8424 Section
22 par. G
an individual whose residence is not
within the Philippines and who is not a
citizen thereof.
An alien who stays in the Philippines for
less than 2 years is considered a non-
resident alien.
Non-Resident Alien Classification
Engaged in Trade or Business
(ETB) - More than 180 days
Not Engaged in Trade or Business
(NETB) - 180 days or less
CASE 1
Buddoy, a Mongolian National,
arrieved in the Philippines on
January 1, 2019 to vist his Filipina
Girlfriend. He planned to stay in the
country until December 31, 2021, by
which time he would go back to his
legal wife and family in Mongolia.
CASE 2
Rihanna, an American singer,
was engaged to sing for one
week at the Western
Philippine Plaza after which
she returned to USA,
CASE 3
Mr. Almansor Sebastian, an Iranian and a
resident of Tehran, Iran stayed in the
Philippines from July 1-15, 2019 to watch the
2020 FIBA world qualifying tournament held
in MOA Philippines. During his stay, he
bought equity investments from Alpha and
Beta Corporations (domestic). He likewise
invested in a mutual fund of Banko de Isla de
Filipinas, a local bank.
CASE 4
Floyd, an American Citizen who is
married to a beautiful Filipina owns a
building in the United States, and leases
the same to businesses owned by
Filipino residents. Floyd has his
residence in the Philippines and all his
children are studying in top Philippine
universities.
CASE 5
A Japanese computer expert was
hired by a Philippine Corporation
to assist in its computer system
installation for which he had to
stay in the Philippines for 6
months.
COMPREHENSIVE CASE
Kronge Konsult, Inc. (KKI) is a Philippine
corporation engaged in architectural design,
engineering, and construction work. Its principal
office is located in Makati City, but it has various
infrastructure projects in the country and abroad.
Thus, KKI employs both local and foreign
workers. The company has adopted a policy
that the employees' salaries are paid in the
currency of the country where they are
assigned or detailed.
TAXPAYER NO. 1
Kris Konejero, a Filipino
accountant in KKl's Tax
Department in the Makati office,
and married to a Filipino engineer
also working in KKI.
TAXPAYER NO. 2
Klaus Kloner, a German national
who heads KKl's Design
Department in its Makati office.
TAXPAYER NO. 3
Krisanto Konde, a Filipino engineer in KKl's
Design Department who was hired to work at
the principal office last January 2019. In April
2019, he was assigned and detailed in the
company's project in Jakarta, Indonesia,
which project is expected to be completed in
April 2021
TAXPAYER NO. 4
Kamilo Konde, Krisanto's brother, also an
engineer assigned to KKl's project in
Taipei, Taiwan. Since KKI provides for
housing and other basic needs, Kamila
requested that all his salaries, paid in
Taiwanese dollars, be paid to his wife in
Manila in its Philippine Peso equivalent
TAXPAYER NO. 5
Karen Karenina, a Filipino architect in
KKl's Design Department who reported
back to KKl's Makati office in June 2019
after KKl's project in Kuala Lumpur,
Malaysia was completed.