BIR Ruling [DA-175-06]

March 27, 2006 BIR RULING [DA-175-06] Sections 22 (E) (3), 23 (C) & 42 (C) (3) BIR Ruling No. DA-364-98 and DA-001-02 Tan Acut & Lopez 23rd Floor, Philippine Stock Exchange Centre East Tower, Exchange Road Ortigas Center, Pasig City Attention: Atty. Maritoni Z. Liwanag Atty. Francis C. Aguilar Gentlemen : This refers to your letter dated September 26, 2005 requesting for confirmation of your opinion that Mr. Martin Tsui ("Mr. Tsui" for brevity) is not subject to Philippine income tax. As represented, Mr. Tsui is both a citizen of the United Kingdom of Great Britain and a Hong Kong national, with permanent residence at 36 San Francisco Avenue, Royal Palms, Yuen Long, Hong Kong. He is presently employed as Operations Manager by InventAsia Limited (formerly MPP-Hong Kong Limited), a Hong Kong company which has its registered office at 12th Floor China Merchants Tower, Shun Tak Center 168-200 Connaught Road, Central Hong Kong. In June 2004, InventAsia Limited established a representative office in the Philippines which is licensed to engage merely in information dissemination and support. Pursuant to his permanent employment as Operations Manager of InventAsia Limited in Hong Kong, Mr. Tsui acts as Project Coordinator of the latter's Manila representative office by virtue of which he spends time in the Philippines to carry out his oversight function in the latter. DTAIaH For the period between January 1 and December 31, 2004, Mr. Tsui stayed in the Philippines for an aggregate period of less than 180 days. The remuneration of Mr. Tsui, which is paid in Hong Kong dollars in Hong Kong is borne by InventAsia Limited which is based in Hong Kong and not by the latter's Manila representative office. In reply, please be informed that under Section 22(G) of the Tax Code of 1997, a nonresident alien shall mean an individual whose residence is not within the Philippines and who is not a citizen thereof. Moreover, Section 25(A) of the same Code provides that a nonresident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year shall be deemed a nonresident alien doing business in the Philippines, notwithstanding the definition of nonresident alien as provided under Section 22(G) of the Tax Code of 1997. Conversely, an alien who stays in the Philippines for less than 180 days is considered a nonresident alien not engaged in trade or business. In view of the foregoing and since Mr. Tsui is a nonresident alien not deriving income from sources within the Philippines and whose stay herein does not exceed 180 days in a calendar year, this Office confirms your opinion that he is not subject to Philippine tax. 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, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service