BIR Ruling

August 13, 1970 Mr. Fidel Dabu Floridablanca, Pampanga S i r : This refers to your letter dated April 27, 1970 requesting information on a query stated as follows: "I am a naturalized American citizen since I have been in the active service in the U.S. Naval Service Department, that was on July 28, 1939. "When I was retired in the U.S. Naval service in the year 1950 I made my residence in the Philippines continuously up to the present. cdt "Ever since I was in the service and up to the present I used to file and report my income tax returns to the American government for the reason that I am an American citizen and my income comes only from the U.S. government in the form of retired pension . . . now amounting to $2,460.00 annually. "I have not nor at present receiving any income from the Philippine government. "Do I have to file my income tax returns in the Philippines? Shall I have to file my income tax returns in the U.S. government at the same time? If found out to be not exempt, shall I be required to pay tax in the Philippines out of my income as retired U.S. Navy personnel?" In reply, I have the honor to inform you under the provisions of Section 45(1)(B) of the Tax Code as amended by Republic Act No. 6110, every alien residing in the Philippines regardless of whether the gross income was derived from sources within or outside the Philippines is required to file an income tax return. As there is no law exempting from Philippine income tax the pension which you receive from the U.S. government on account of previous, services rendered to the U.S. Armed Forces, you should file a Philippine income tax return declaring said pension as part of your gross income. However, you may claim as deduction against your Philippine income tax any income tax, war-profits tax and/or excise profits tax paid by you to any foreign country; or as tax credit provided you signify in your income tax return your desire to avail of such credit. Pursuant to Section 85 of the Income Tax Regulations "foreign country" means any foreign state or political subdivision thereof, or any foreign political subdivision thereof, or any foreign political entity which levies and collect said taxes. (See Sec. 30(c)(1)(B), (2)(B) and (3)(B), N.I.R.C.) The question as to whether you should file also an income tax return with the United States Government is not within the competence of this Office to decide. cdti Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue