BIR Ruling [DA-006-03]

January 9, 2003 BIR RULING [DA-006-03] RR No. 11-99, E.O. 98 RAO No. 10-95; RMO No. 75-99 International Rice Research Institute MCPO Box 3127 1271 Makati, Philippines Attention: Mr. Ronald P. Cantrell Director General Gentlemen : This refers to your letter dated February 19, 2001 requesting that the International Rice Research Institute's (IRRI) be exempted from securing a Taxpayer's Identification Number (TIN) on the ground that it is a tax exempt institution. It is represented that the IRRI has been encountering problems in connection with the clearance and registration of its vehicles because it has not secured a TIN; that under Revenue Regulations No. 11-99, the TIN of the applicant should be indicated in all applications for government permits, licenses, and clearances; and that the Land Transportation Office and the PNP-Traffic Management Group are asking for a confirmation from this Office that the IRRI is not required to secure a TIN. In reply, please be informed that Section 3 of Revenue Regulations No. 11-99 providing "All taxpayers required to make, render or file a return, statement or other document with the BIR shall apply for the issuance of the TIN. . . .", is governed by Section 236 (J) of the National Internal Revenue Code of 1997 and its implementing rules end regulations. This law limits the classes of persons who shall be supplied with TIN, as follows: "(J) Supplying of Taxpayer Identification Number (TIN). Any person required under the authority of this Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number (TIN) which he shall indicate in such return, statement or document filed with the Bureau of Internal Revenue for his identification for tax purposes, and which he shall indicate in certain documents, such as but not limited to the following: . . ." Under Revenue Memorandum Order No. 22-91, dated July 3, 1991, only the following persons shall be supplied with TIN: " Wage earners and employees; overseas contract workers; professional practitioners; businesses (single proprietors, partnerships or general partnerships); corporations; estates and trusts; and purely withholding agents ." Articles 1 and 5(2), of Presidential Decree No. 1620 titled Granting to the International Rice Research Institute (IRRI) the Status, Prerogative, Privileges and Immunities of an International Organization, provide: "Article 1. Status of an International Organization . The Government of the Republic of the Philippines recognize the International Rice Research Institute (hereinafter referred to as the Institute) as an international organization, and hereby accords to the Institute such status in the Philippines." "Article 5. Taxation and Customs. 1. . . . 2. All gifts, bequests, donations and contributions, which may be received by the Institute from any source whatsoever, or which may be granted by the Institute to any individual or non-profit organization for the educational and scientific purposes, shall be exempt from the payment of the taxes imposed under Title III of the National Internal Revenue Code. All gifts, contributions shall be considered allowable deductions for purposes of determining the income tax of the donor." TAScID "4. The Institute shall be exempt from the payment of all customs duties and related levies of any kind, except charges for storage, transport and services supplied, and from prohibitions and restrictions on the import or export of articles intended for its official use." Section 3 of Revenue Regulations No. 11-99 provide as follows: "Section 3. TIN APPLICATION. All Taxpayers required to make, render or file a return, statement or other document with the BIR shall apply for the issuance of a TIN. These include new taxpayers and persons required to present TIN Cards to government agencies by virtue of E.O. 98 and this Regulations. The application for the issuance of the TIN shall be filed with the Revenue District Office having jurisdiction over the residence, place of office or place of business of the applicant." Section 1 of Executive Order No. 98 provides, as follows: "Section 1. All government agencies and instrumentalities, including Government-Owned and/or Controlled Corporations, and all Local Government Units, are hereby directed to incorporate the Taxpayer Identification Number (TIN) in all forms, permits, licenses, clearances, official papers and documents which they issue to persons transacting business with them, be they natural or juridical." Since the IRRI is exempt from all taxation, and may not be constituted as a tax withholding agent of the Philippine Government, and considering further that since IRRI is not a government agency or instrumentality, neither is it a government owned and controlled corporation or a local government unit, this Office confirms your opinion that the IRRI may not be required to secure a TIN. While the TIN is an essential requirement in all applications for a government permit, license, clearance, official paper or document because it identifies the taxpayer, and such application does not necessarily include payment of taxes, IRRI is not among those included in the enumeration provided for in Executive Order No. 98 requiring application of the TIN. However, as there are employees working for IRRI, it shall be constituted as a withholding agent insofar as the compensation of its employees are concerned. Therefore, for the purpose of withholding the tax on compensation income of its employees and filing of the appropriate remittance returns thereto, it will be advisable for IRRI to secure a TIN to facilitate compliance with the withholding tax rules and regulations. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements imposed in this letter are not complied with, then this ruling is considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group