BIR Ruling

August 23, 1971 Mr. Roland P. Paciano SGT, USAF (Ret) 323 Harward Avenue Marisol Village Angeles City S i r : This refers to your letter dated April 16, 1971 which was referred to this Office for reply, the subject matter of which is the liability for income tax of the "military" pension which you are receiving from the U.S. Government as a retiree. acd You contend that considering that your "military" pension represents income earned before you came to the Philippines, only the U.S. Government has a right to tax your income. You also contend that if your pension is taxable by the Philippine Government, you would be paying an excessive amount of tax. In reply, I have the honor to inform you that under Section 45(1)(L) of the Philippine National Internal Revenue Code, as amended by Republic Act No. 6110, every alien residing in the Philippines regardless of whether his income was derived from sources within or without the Philippines is required to file an income tax return and to pay the tax thereon; and as there is no Philippine law which exempts your "military" pension from the payment of income tax on account of previous service rendered by you to the U.S. Air Force, such pension is necessarily subject to income tax. In this connection, you are informed that pursuant to Republic Act No. 360, pensions, compensations, and other benefits granted or administered by the U.S. Veterans Administration are exempt from income tax. However, as there is no showing that you are a veteran, you cannot claim exemption from the payment of income tax under the aforesaid law. cdt You may, however, claim as deduction from your Philippine income tax any income tax, war-profits and/or excess-profits tax paid by you to any foreign country, or claim such payment as tax credit, provided you signify in your income tax return your desire to avail of such credit. (Sec. 30(c)(1),(B) & (3) (B), N.I.R.C.) Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue