BIR Ruling [DA-304-98]

July 3, 1998 BIR RULING [DA-304-98] Rev. William V. Layda AMG International UP P.O. Box 228, Diliman Quezon City S i r : This refers to your letter dated February 23, 1998 requesting for a ruling as to whether your salary or allowance received from Ang Mananampalatayang Gumagawa, Inc. (AMG, Inc.) is exempt from tax. It is represented that you are 58 years old, Filipino with four (4) children who are all above 23 years of age; that you and your family have been missionaries to Malaysia and Indonesia for 22 years; that the mission agency you are connected with has presently assigned you here in the Philippines to head the mission, AMG, Inc., which is a non-stock, non-profit religious organization duly registered with the Securities and Exchange Commission (SEC); that the organization is engaged in social works like running feeding programs in various economically depressed areas in the country, and orphanage; that AMG, Inc. is likewise engaged in other ministries like evangelism and church planting; that as the religious worker, you are receiving salary or allowance from contributions/support coming from few individuals and two (2) churches in the United States through your office there; that their contributions varies from month to month: that you are, however, receiving an average salary/allowance of P25,000.00 a month; that you spend the amount received for your family board (food) and lodging and other utilities; that you were likewise, given a service vehicle for your official use; that whenever you or your family use it for personal purpose, you are being charged per mileage; and that you are also paying your SSS and Pag-Ibig monthly dues as self-employed or individual contributor. TSacID In reply, since the monthly financial support being received by you are not compensation and/or salary per se, but donations made by individuals and churches in the United States of America, which are being coursed through your office in the U.S.A., said financial support are not therefore, subject to Philippine income tax. (BIR Ruling No. 015-94 dated January 12, 1994) EHTADa Likewise, the use of the official service vehicle which was assigned to you as a consequence of your being the head of the mission is an administration expense duly attributable to AMG, Inc. On the other hand, your incidental use of the aforesaid vehicle for your personal use under the "charge by the mileage" basis, shall be considered as necessary "cost of living" expense to which part of the gift/donations received by you is being applied. Finally, your membership with the Social Security System (SSS) and Pag-Ibig and the corresponding payment of the monthly contribution thereof, as self-employed or individual contributor, does not negate the fact that you are a missionary whose services rendered is necessarily not for the purpose of earning profit or as an employees of AMG, Inc. receiving compensation. Since, the above-mentioned support/donations received by you are not considered compensation or income subject to income tax, the above membership contributions cannot likewise be taken into account as items excluded from gross income. (Section 32 (B) (7) (f) of the Tax Code of 1997) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group