BIR Ruling

March 20, 1967 Mrs. Lourdes Ramos College, Laguna M a d a m : This refers to your letter dated February 21, 1967, stating the following: "Being the attorney in-fact of a neighbor who left for abroad to work last November 8, 1966, I would like to know whether his income received from the foreign country, is taxable or not. If so, what is the tax basis? He worked with the Philippine government for 5 months, then 2 months in Vietnam and now he is in Canada." cdpr In reply thereto, I have the honor to inform you as follows: Under Sections 21 and 45 of the Tax Code, every citizen of the Philippines of lawful age, whether employed in the Philippines or abroad, having a gross income of one thousand eight hundred pesos or more including dividends, for the taxable year is liable to the payment of income tax in the Philippines, which payment could either be made by him or through his attorney-in-fact. However, he is allowed credit for income tax paid in a foreign country pursuant to Section 30(c)(3)(A) of the Tax Code. Before credit is allowed, he must signify in his return his desire to claim a credit for taxes paid to a foreign country. (Section 82 of Revenue Regulations No. 2) Pursuant to Executive Order No. 195, dated November 6, 1965, the parity value of the peso was modified from US $0.50 to US $0.2564103. In effect, the official parity of the Philippine peso to the U.S. dollar became P3.90 to $1.00, effective November 8, 1965. Accordingly, for income tax purposes, income, salaries or emoluments received by a Filipino citizen in U.S. dollars, whether received in the Philippines or abroad, should be reported at the rate of P3.90 to $1.00. prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue