BIR Ruling

September 22, 1969 Mr. Ireneo R. Clapano, Jr. 2339 Topacio Street San Andres Bukid Manila S i r : This refers to your letter dated January 12, 1969 relative to your internal revenue tax case involving the amount of P140.40 as deficiency income tax for 1967. The records show that you filed a joint income tax return for 1967 on April 4, 1968 declaring a gross income of P7,133.14; that you did not report as part of your taxable income the salary of your wife from the World Health Organization (WHO) for the reason that WHO employees are allegedly exempt from Philippine income tax by virtue of a special treaty binding upon the Republic of the Philippines; and that per your return you computed and paid an income tax for 1967 in the amount of P10.00. LexLib In reply thereto, there if quoted hereunder pertinent provisions of the "Agreement Between the World Health Organization and the Government of the Republic of the Philippines." "Article VIII: "Section 22. Officials of the Organization shall . . . ; (b) be exempt from taxation in respect of the salaries and emoluments paid to them by the organizations; . . . "Section 21. The Director General or the Regional Director as his duly authorized representative, shall from time to time communicate to the government of the Republic of the Philippines the names of those officials to whom the provisions of this Article and Article IX shall apply." The above-quoted Agreement took effect on July 22, 1951, and is binding upon the Republic of the Philippines as one of its signatories and for being a member of the organization itself. (See Section 29(b)(6), National Internal Revenue Code) Under the provisions of the foregoing Agreement, only the officials of the WHO, whose names were communicated to the Philippine Government are entitled to exemption from the payment of income tax in respect of the salaries and emoluments received by them from the organization. In the instant case, there is no showing that such communication has been made wherein the name of your wife is included. Such being the case, the salary of your wife received from the WHO is not exempt from income tax. In the light of the foregoing, our demand against you for payment of the deficiency income tax in the amount of P140.40 is hereby reiterated. LexLib Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue