BIR Ruling [DA-261-05]

June 16, 2005 BIR RULING [DA-261-05] Rev. Regs. No. 5-01 Office of the President Malacaang Palace Manila Attention: Secretary Ma. Lourdes P. Varona Correspondence Secretary Gentlemen : This refers to the e-mailed letter of Mr. Benjamin G. Edic to your Office dated February 15, 2005 indorsed to this Office on February 24, 2005, inquiring if Overseas Filipino Workers (OFWs) are exempt from filing income tax returns. In reply, please be informed that under Section 23(C) of the Tax Code of 1997, an OFW is taxable only on income from sources within the Philippines. Pursuant to Section 51(A)(2)(d) of the same Code, an individual who is exempt from income tax is not required to file an income tax return. Nevertheless, pursuant to Section 51(A)(3) of the Tax Code of 1997, any individual not required to file a return may be required to file an information return. Accordingly, Revenue Memorandum Order No. 30-99 required OFWs to make information returns beginning March 17, 1999. This requirement, however, was lifted by Revenue Regulations No. 5-01 Re: Revoking the Requirement for Non-Resident Citizens, Overseas Contract Workers (OCWs) and Seamen to File Information Returns on Income Derived from Sources Outside the Philippines, viz "SEC. 2. FILING OF INFORMATION RETURNS (BIR FORM 1701C OR BIR FORM 1703) NO LONGER REQUIRED. Non-resident citizens who are exempt from tax with respect to income derived from sources outside the Philippines in accordance with Section 23(B) and (C), in relation to Section 22(E) and Section 51(A)(2)(d) and (A)(3) of the Tax Code of 1997, but who are nevertheless mandated to file information returns (BIR Form 1701C or the new computerized BIR Form 1703) pursuant to RMO 30-99 and RR 9-99, shall no longer be required to file the same on their income derived from sources outside the Philippines beginning taxable year 2001." In view of the foregoing, beginning taxable year 2001, OFWs are no longer required to file either income or information returns only on income from sources without the Philippines (i.e.,income from abroad). Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group