BIR Ruling

January 23, 1969 Chamber of Commerce of the Philippines Magallanes Drive, Manila Attorney: Mr . Benito F. Medina Secretary Gentlemen : This refers to your letter dated December 4, 1968 requesting information as to the veracity and accurateness of the alleged "press release" issued by this Office relative to the applicability and coverage of Republic Act No. 5423, re: "Income Tax on Corporations". cdll In reply, I have the honor to inform you that the "press release" issued by this Office regarding the scope and applicability of Republic Act No. 5431 (not 5423) and Republic Act No. 5325 on corporate income tax of non-resident foreign corporation and income tax of non-resident alien individuals, respectively, had been erroneously quoted. This Office is aware of the confusion generated by the passage and implementation of these laws, especially with regard to the dates for the payment of taxes. The confusion apparently centered on the applicability of the new rates of taxes. The new rates of corporate income tax prescribed by Republic Act No. 5431 are applicable to income earned beginning July 1, 1968. Non-resident foreign corporations not engaged in trade or business in the Philippines are subject to the new rates of corporate income tax prescribed by Republic Act No. 5431 on income derived by them from Philippine sources beginning July 1, 1968. Pursuant to Section 54 of the Tax Code, as amended by Republic Act No. 5431, the tax withheld from the income of non-resident foreign corporations engaged in trade or business in the Philippines from January 1, 1968, including the 3rd quarter ending September 30, 1968, must be paid on or before October 25, 1968. However, upon request and for meritorious reasons, the corresponding tax for the 1st and 2nd quarters may be paid on or before November 25, 1968. Non-resident alien individuals not engaged in trade or business in the Philippines are subject to the increased rates of tax prescribed by Republic Act No. 5325 on income derived by them from Philippine sources beginning January 1, 1968. The taxes withheld from the income of non-resident alien individuals not engaged in trade or business in the Philippines for the 1st and 2nd quarters of 1968 as well as the 3rd quarter ending September 30, 1968 must be paid on or before October 25, 1968. However, upon request and for meritorious reasons, the corresponding tax for the 1st and 2nd quarters may be paid on or before November 25, 1968. In this connection, it may be stated as a general rule that this new periods within which to pay withheld taxes prescribed by Republic Act No. 5431, being procedural in nature shall be applicable even to income withheld before the passage of the law; and the period of payment of the withheld taxes prescribed therein shall be applicable to income of both non-resident alien individuals and corporations not engaged in trade or business in the Philippines. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue