BIR Ruling

September 3, 1973 German B. Araez, Incorporated 3rd Floor, R & G Tirol Building 889 E. de los Santos Avenue Cor. Scout Albano St., Quezon City Gentlemen : In reply to your letter dated July 20, 1973, I have the honor to inform you that this Office hereby reiterates its ruling of June 6, 1973 on a query involving the same subject matter and issue, that as employer of the Filipino employees hired by you to work in your logging project in Indonesia, you are required under Article 2, Supplement A to Title II of the Tax Code to deduct and withhold the corresponding income tax on the employee's entire remuneration per Contract of Employment computed at the rates applicable to non-resident Filipino citizens, considering that the aforesaid Filipino employees are being taxed on the basis of the gross amount of their income from sources abroad, consisting of 40% paid to each of them in equivalent rupiah money and 60% to be paid or remitted to the employee's authorized representative in the Philippines. (Sec. 21, Tax Code as amended by Presidential Decree No. 69; see also Sec. 37(c)(3), N.I.R.C.) They may, however, deduct the amount of the tax withheld, from their income tax computed and arrived at in B.I.R. Form No. 17.01-C. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."