BIR Ruling

March 4, 1977 The Director National Bureau of Investigation Manila S i r : This refers to your letter dated January 18, 1977 requesting a ruling on whether certain informers abroad who furnished information leading to the seizure by that Office of smuggled foreign currencies, are subject to Philippine income tax on the reward paid by the Government through the Central Bank. In your letter of February 24 1977, you represented as follows: "For your complete information and guidance in arriving at the appropriate opinion, allow us to mention that our informant is a non-resident foreigner who performs his work by gathering pertinent information abroad in his country of residence which meets the requirements of the law. Thereafter, he comes to the Philippines to deliver the products of his work and assists in identifying suspect persons and/or containers of foreign currencies being smuggled during the actual operation." In reply, I have the honor to inform you that under the foregoing facts, the personal service of the informers, who are non-resident aliens not engaged in trade or business in the Philippines, was performed without the Philippines. Accordingly, the reward paid by the Central Bank to sun non-resident aliens being subject to income tax only on income from sources within the Philippines, pursuant to Section 22(b) of the Tax Code. aisadc Inasmuch as the reward payments to the aforementioned non-resident aliens are not subject to income tax, the provisions of Section 53(a)(1) of the Tax Code do not apply thereto and consequently, said reward payments may be remitted to non-resident informers without deducting therefrom the 30% tax prescribed in the aforesaid law. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3