BIR Ruling [DA-311-97]

September 5, 1997 BIR RULING [DA-311-97] Philippine Communications Satellite Corporation Telecoms Plaza Building 316 Sen. Gil Puyat Avenue 1200 Makati City Attention: Atty. Oscar Rudijer T. Santiago Gentlemen : This refers to your letter dated July 28, 1997 requesting for a ruling as to what appropriate rates of tax should be withheld from the remunerations of an individual derived from holding various positions in the company. It is represented that the Philippine Communications Satellite Corporation (PHILCOMSAT) is a grantee of a legislative franchise under Republic Act No. 5514 effective June 21, 1969 to establish, construct, maintain and operate in the Philippines, stations and associated equipment and facilities for international satellite communication; that this franchise was amended by Republic Act No. 7949; that you have an employee who is a member of the Board of Directors and also a member of the Executive Committee; that as an employee, he receives his salary as such and as a Director of the Board, a director's allowance; that when he sits in the Executive Committee, he likewise receives an allowance; and that the rates of tax being withheld on these income vary on each remuneration. In reply, please be informed that for purposes of withholding tax, the term 'compensation' means all remuneration for services performed by an employee for his employer unless specifically excepted under Sections 27, 28 (b) and 71 of the Tax Code, as amended. The name by which the remuneration for services is designated is immaterial. Thus, salaries wages, emoluments and honoraria, bonuses, allowances (such as transportation, representation, entertainment and the like), fringe benefits (monetary and non-monetary), fees, including directors fees , taxable pensions and retirement pay, and other income of a similar nature constitute 'compensation income'. (Sec. 2, Revenue Regulations No. 6-82, as amended.) ACIESH Accordingly, it is the opinion of this Office that all the remunerations derived by your said employee is included in his taxable 'compensation income,' (unless specifically excepted under Secs. 27, 28 (b) and 71 of the Tax Code, as amended) whether he derives the same as an employee of your company, as a member of your Board of Directors or as a member of the Executive Committee, and the same shall be subject only to the withholding tax on wages as provided for under Rev. Regs. No. 6-82, as last amended by Rev. Regs. No. 4-93, implementing Sec. 72 of the Tax Code, as amended. (BIR Ruling No. 89-95 dated June 15, 1995) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Assistant Commissioner Legal Service