BIR Ruling [DA-569-98]

December 21, 1998 BIR RULING [DA-569-98] Dr. Angela E. Bataclan Chief, Audit Data Bank Division Bureau of Internal Revenue Quezon City M a d a m : This refers to your Memorandum dated October 30, 1998 inquiring as to whether or not Presidential Decree No. 1354 dated April 21, 1978 has already been amended and/or superseded. cdti In reply, please be informed that Section 1 of P.D. No. 1354 which imposed a final income tax of 8% on every subcontractor, whether domestic or foreign, entering into a contract with a service contractor engaged in petroleum operations in the Philippines was totally eliminated by Batas Pambansa Blg. 135 which took effect on January 1, 1982. It is, therefore, safe to conclude that said Section 1 of P.D. 1354 was repealed by the general repealing clause under Section 16 of B.P. Blg. 135. However, Section 2 thereof which provided that aliens employed by petroleum service contractors and subcontractors are subject to a final income tax of 15% of the salaries, wages, annuities, compensations, remunerations and emoluments received from such contractors or subcontractors was retained and incorporated in the Tax Code of 1977, as amended by B.P. Blg. 135, and in the Tax Code of 1993 which was numbered as Section 22 (e). These provisions are also retained in the Tax Code of 1997 and now renumbered as Section 25(E) but slightly modified as follows: 1. The words "service contractor" and "service subcontractor" are now preceded by the word "foreign"; and 2. It now contains a proviso that "the same tax treatment shall apply to a Filipino employed and occupying the same position as an alien employed by petroleum service contractor and subcontractor". cdta Please be guided accordingly. Very truly yours, (SGD.) ERLINDA O. MATIC Assistant Commissioner (Legal Service)